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eBay, PayPal Tie the Knot

After months of trying to cram the two companies together, eBay said it has now officially acquired PayPal .

At Thursday's meeting of PayPal stockholders, the transaction was approved by holders of approximately 65 percent of the outstanding shares of PayPal common stock, which represented more than 99 percent of the shares voting.

The companies confirmed that PayPal will continue to operate as an independent brand and its controversial gaming business will be phased out by the end of 2002.

eBay's current payment service, eBay Payments by Billpoint, will complete its phase-out of its operations in the first half of 2003.

But the news was bittersweet In addition, Peter Thiel announced today that he has resigned as PayPal's CEO. Matt Bannick, eBay's senior vice president, global online payments, said he would assume all of Thiel's responsibilities.

As part of the deal eBay acquired all of the outstanding shares of PayPal in a stock-for-stock transaction using a fixed exchange ratio of 0.39 of an eBay share for each PayPal share. Based on current stock prices, the acquisition is valued at approximately $1.5 billion. eBay said it expects the acquisition to pad its fourth-quarter revenue somewhere between $60 and $64 million.

San Jose, Calif.-based eBay said there are no more legal issues to be resolved in connection with the transaction. However, PayPal still has to deal with a federal court in Wilmington, Del., after First USA alleged that the Palo Alto, Calif.-based Internet payments company infringed on two of its patents for a "cardless payment system."