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With Merger Complete, PayPal CEO Resigns

It's official. eBay's acquisition of PayPal is complete, the companies announced Oct. 3, 2002, along with the news that PayPal CEO Peter Thiel, who led the merger, has resigned. Matt Bannick, eBay's Senior Vice President, Global Online Payments, will assume all of Thiel's responsibilities.

Several pending shareholder lawsuits attempting to block the merger did not stop nearly two-thirds of holders of 61.6 million outstanding shares of PayPal from voting in favor of the acquisition. The two-thirds represented more than 99 percent of the shares voting.

Keeping with the provisions announced on July 8, 2002, eBay acquired all of the outstanding shares of PayPal in a tax-free, stock-for-stock transaction using a fixed exchange ratio of 0.39 of an eBay share for each PayPal share. Based on eBay's average closing stock price over the period two days before and after the acquisition was announced, the transaction is valued at approximately $1.5 billion.

eBay said PayPal will continue to operate as an independent brand, keeping the PayPal name. Billpoint, eBay's current payment solution, will be phased out in the first half of 2003 along with PayPal's divisive processing of transactions to online casinos.

eBay also said it expects the acquisition will contribute as much as $64 million in net revenues in the fourth quarter of 2002. eBay estimated costs related to the acquisition at $17 million.

In other news, PayPal announced it has hit 20 million registered users, which is twice the number of account-holders the company had one year ago. PayPal said it expects more than $10 billion in member transactions has been sent through its network.

"By focusing on what we do best - providing secure, convenient online payments -PayPal has continued to attract new users and enjoy phenomenal growth," said David Sacks, PayPal's Chief Operating Officer.

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