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EBay Pays Up for PayPal

July 8

EBay announced today that it will acquire Internet payment service vendor PayPal for about $1.5 billion.

The move -- the reverse of outsourcing -- represents the vertical integration of a service already used in 40% of EBay transactions. Analyists claim the deal with increase EBay's take on transactions in which PayPal is used from 7% to 10% of their value.

In the stock transaction, 0.39 of each EBay share will be traded for one PayPal share, about a 15% premium over PayPal's closing price on Friday. The payment company, having gone public only last February, had been trading at about $20 per share after hitting a high of about $30 in late May. While rapidly growing, it has never generated a profit.

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