SAN JOSE, CALIF.—PayPal is splitting from eBay and will become a separate and publicly traded company next year.

Almost a year after billionaire Carl Icahn opened a proxy fight pushing for the spinoff of PayPal, eBay President and CEO John Donahoe said Tuesday that, “The industry landscape is changing, and each business faces different competitive opportunities and challenges.”

Donahoe will not have a management role in either company but will oversee the separation, expected to be completed in the second half of 2015.

He may also have a seat on the board at one or both of the boards of the two companies, along with eBay Chief Financial Officer Bob Swan.

EBay, based in San Jose, Calif., said that the separation was the best path for growth and shareholder value creation for each business.

EBay is an e-commerce site that connects sellers to buyers. PayPal, acquired by eBay in 2002 for $1.3 billion, has been its fastest growing segment.

In the most recent quarter, PayPal gained 4 million new, active registered accounts, up 15 per cent, to 152 million.

Consumers who use PayPal can send and receive payments online, with all transactions backed by prepaid user accounts, bank accounts or credit cards.

PayPal is available in 203 markets worldwide, including Canada, and is on track to process one billion mobile payments in 2014.

PayPal Canada announced in July that it planned an active advertising campaign throughout the summer and fall to highlight a new brand identity.

But major competitors are now getting into the mobile payment sector, including Apple.

Last month Apple Inc. announced a new digital wallet service called Apple Pay that is integrated with its Passbook credential-storage app and its fingerprint ID security system.

There is a push away from traditional credit cards, particularly after a string of high-profile data breaches that have ensnared major retailers like Target and Home Depot.

Citibank predicts that the mobile payments business will grow from $1 billion last year, to nearly $60 billion by 2017.

“A thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively,” Donahoe said.

Shares of eBay jumped 8 per cent to $57.06 before the opening bell, close to its high for the year.

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Dan Schulman, an executive at American Express, will be the new president at PayPal, effective immediately. The 56-year-old will become PayPal’s CEO once the separation takes place.

Devin Wenig, currently president of eBay Marketplaces, will become CEO of the new EBay Inc. He will lead the eBay Marketplaces and eBay Enterprise businesses.

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