Neth AR} al SSS Ayan yy Inc is to be split into two companies. It owns the online auction site and PayPal, a payments as two separate companies. This is because the two businesses have different growth rates and profit rates. PayPal is the star performer, with revenues up 20 per cent. eBay is highly profitable but itis forecast to grow only between zero and 5 per cent in the next few years. Some analysts have questioned whether eBay, the auction site, will be as profitable without PayPal. Currently, eBay uses information about customer purchases made from other internet sites when these purchases are made using PayPal. Without PayPal, it will have less information about the buying behaviour of its customers. This will make it more difficult to target eBay users with information about what they could buy on the site. 1 Why might eBay demerge with PayPal? 2 To what extent is the demerger likely to lead to higher growth for each of the businesses?