Here's How eBay Will Split

eBay Inc EBAY has finally commenced its planned separation of its Payments business and its Marketplaces business announced in September 2014. This week, the company finally filed a Form 10 for PayPal Holdings Inc. with the SEC.

According to the SEC filing, “the separation will provide current eBay stockholders with equity ownership in both eBay and PayPal.” The company expects that “the distribution of PayPal common stock will be tax-free, for U.S. federal income tax purposes, to eBay stockholders (…) The separation will be effected by means of a pro rata distribution of 100% of the outstanding shares of PayPal common stock to holders of eBay common stock. Each eBay stockholder will receive one share of PayPal common stock for every [—] share of eBay common stock held as of the close of business on [—], 2015, the record date for the distribution.”

The Form 10

The Form 10 allows investors to access the full standalone financial statements for PayPal, which they weren’t able to see previously. Going through the filing, Credit Suisse analysts noted that “the changes on the revenue line for the last three years seem largely immaterial and isolated to undoing what was previously intercompany eliminations. And on the expenses and hence operating income lines, Corporate and Other Expenses which were previously help separate have been fully allocated.”

Related Link: How Will PayPal's Market Share Be Impacted By Google Wallet And Apple Pay?

The analysts highlight that “if the domestic versus foreign subsidiary cash balance mix for end-of-2014 at 90% and 10% is ultimately indicative of how the $5b of cash that PayPal is expected to carry post spinoff, this potentially suggests a greater domestic cash balance for eBay Inc. on the other hand which incrementally removes a source of friction against share repurchasing activity.”

Otherwise, the firm does not see this filing as “a thesis-changing event for investors.” Thus, they maintain a Neutral rating and $62 price target on eBay’s stock.