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New York • A split of eBay may put the pieces in play.
EBay's announcement Tuesday that it's spinning off the PayPal payment-services business may make either half of the California-based company a target as industry acquirers from Alibaba Group Holding to Google seek ways to further their dominance of the Internet.
With a takeover of PayPal, Google would stand to become the leader in online payments, which could be integrated into its Android system and counter Apple Inc.'s new Apple Pay, according to Gene Munster, an analyst at Piper Jaffray Cos.
Alibaba, the Chinese e-commerce giant that just pulled off a record U.S. trading debut and is on the hunt for deals, also could take an interest in PayPal, said Daniel Johnson, a money manager at River Road Asset Management.
EBay marketplaces could draw bids, too, because its robust cash flow would appeal to buyout firms, he added.
"Now that PayPal will be a separate company, there's absolutely a possibility of an acquisition," said Johnson, of Louisville, whose firm oversees about $10 billion and owns eBay stock. "There's a strategic benefit that PayPal would bring, whether it's to Google or Alibaba."
Private-equity suitors "could see the value of the underlying cash flows at eBay marketplaces and the ability to leverage those cash flows to make an attractive return," he said.
While Johnson's sum-of-the-parts estimate for eBay is in the mid-$60s, he said strategic buyers may be willing to pay a much higher price because of what they'd be gaining.
It could cost Google $50 billion to $62 billion to buy PayPal alone, according to an estimate in a Sept. 15 report by Piper Jaffray's Munster.
A representative for Alibaba said the company doesn't comment on speculation. A representative for Google didn't respond to a request for comment.
When asked about the potential for a takeover, eBay Chief Executive John Donahoe said a deal isn't the motivation behind the split.
"This is clearly not being done to set any business up for sale," Donahoe said. "This is being set up for each business to compete and succeed in their respective environments."
The split comes after eBay's valuation fell to 2011 levels. Its enterprise value was 13 times trailing 12-month earnings before interest, taxes, depreciation and amortization yesterday, compared with a ratio of more than 16 less than two years ago, according to data compiled by Bloomberg. It's half of the 32 times Ebitda that Amazon.com was valued at Tuesday.
In the 12 months through Monday, eBay posted the fifth- worst performance among technology stocks in the Standard & Poor's 500 Index, data compiled by Bloomberg show.