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EBay, PayPal Draw Up Agreements For Post-Split Future

PayPal will be guaranteed a reliable source of revenue after the payments service separates from EBay Inc. later this year.

The businesses are drawing up a five-year operating agreement in preparation for the split, which was announced six months ago and is scheduled to be completed by the end of this year, EBay said in a statement Thursday. The names of initial board members after the separation were also announced.

An independent PayPal will be freed up to forge alliances with retailers and other financial firms, as Google Inc. and Apple Inc. seek to turn their products into tools for digital payments. EBay’s marketplaces business, which is facing competition from Amazon.com Inc. and Alibaba Group Holding Ltd., has seen revenue growth lagging behind PayPal, which it bought in 2002.

The goal of the contracts is to provide stability and flexibility for each company after the split, EBay Chief Executive Officer John Donahoe said in an interview. The plan was designed so that each enterprise could survive on its own, even if either company was acquired by a competitor, he said.

“The guiding principles are continuity for EBay customers -- merchants and consumers -- as well as synergies and strategic flexibility,” Donahoe said in an interview.

Donahoe will chair PayPal’s board...


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