PayPal makes Venmo a standalone business unit as a circle for potential buyers

PayPal CEO Enrique Llores told executives this week that he is reorganizing the company’s management chain to separate Venmo, the popular mobile payment app, from the company’s other operations, CNBC has learned exclusively.

Venmo will soon become its own standalone segment within PayPal, making it easier to track its progress or potentially sell the company to another company, people familiar with the changes said.

PayPal is looking to hire a digital banking executive to run its new Venmo segment, said the people, who requested anonymity because they were not authorized to speak publicly.

The other two segments will be a PayPal-branded business for merchants and consumers and a payment services unit that includes a Braintree unit and crypto operations, the people said.

Loris, who spent six years as CEO of computer maker HP before taking over as CEO of PayPal in March, is betting that a clearer corporate structure can reignite growth at a company that has lost ground to… apple, Google Stripe is in the battle over e-commerce transactions. Loris replaces Alex Chriss, the former Intuit executive who struggled to revive a stock that had fallen nearly 80% from its pandemic-era peak.

Bloomberg reported in February that a sharp decline in PayPal’s shares had attracted interest from potential suitors, including rival Stripe, to buy parts or all of the company. The company has hired bankers to position itself against takeover bids or activist campaigns, according to Semaphore.

PayPal declined to comment for this story.

PayPal shares rose nearly 3% after the CNBC report was published.

The structural changes come amid the looming threat of a broad round of layoffs like those seen at rival payments companies roadblock. Earlier this year, PayPal executives were tasked by former CEO Chris to come up with 15% staff cuts, but that effort was left in limbo when Chris was replaced, one of the people said.

Venmo, which has nearly 100 million users, is seen as PayPal’s most valuable standalone asset because of its growth prospects. It is a prime target for potential acquirers and could attract a premium valuation, analysts said.

Amid the changes, two key executives will depart, Diego Scotti, who ran the consumer group that included Venmo, and Michelle Gil, who oversaw a small business group that is being dissolved, the people said. Scotty and Jill did not immediately respond to requests for comment.

The company will also be forming a new AI transformation group led by Anshu Bhardwaj, a former Walmart CTO, according to people. The financial services unit, which supports other key business sectors, will be run by Scott Young, a former Goldman Sachs Peoples Director of Consumer Banking said.

PayPal reports first-quarter results next week.