Will Alibaba Buy eBay Once PayPal Is Gone?

Ebay Inc.'s (Nasdaq: EBAY) plans to spin off its PayPal unit has left many on Wall Street salivating over the potential of the stand-alone payments business.

And some pundits are speculating that Google Inc. (Nasdaq: GOOG) or Alibaba Group Holding Ltd. (NYSE: BABA) might buy PayPal.

But they should be asking this question: Will Alibaba buy eBay?

"There wasn't really a natural buyer for eBay up until about a week ago," Gil Luria, an analyst at Wedbush Securities, told Bloomberg. "Now there's a heavily capitalized, cash rich, fast-growing company with ambitions of getting into the West that could easily, easily buy it."

The spin-off plan announced today (Tuesday) calls for PayPal to become a separate publicly traded company next year. PayPal will be led by Dan Schulman, the former head of American Express Co.'s (NYSE: AXP) online and mobile payments business. The new eBay CEO will be Devin Wenig, the current president of eBay marketplaces.

Investors approved, sending EBAY stock up about 7.54% on the day to $56.63.

To be sure, the benefits for PayPal are clear. Independence will help PayPal to focus on battling Apple Inc.'s (Nasdaq: AAPL) forthcoming Apple Pay service for a mobile payments market that Citi Investment Research expects to grow from $1 billion last year to $58.4 billion by 2017.

Without the conflict of interest inherent in being owned by eBay, PayPal will have more freedom in seeking payments partnerships with other online retailers, including Amazon.com (Nasdaq: AMZN) and Alibaba.

But eBay? That's a different story.

In an interview with CNBC this morning, even CEO John Donahoe seemed unsure of the benefits of the split for eBay: "Well, perhaps one of the most important new opportunities it gives eBay is control over its own destiny."

In fact, divesting PayPal will leave eBay much more exposed as an e-commerce company squeezed between two giants – Amazon and an ambitious Alibaba.

Sooner or later, eBay will need to be acquired by a larger partner in order to survive, and Alibaba happens to be the ideal partner.

An eBay acquisition makes even more sense from Alibaba's perspective.

Let's just start with the cost…