Stripe, Advent Make $53 Billion Offer for PayPal
Synopsis
The consortium has reportedly submitted a takeover proposal representing a 28% premium to PayPal's share price.
Key Highlights
- PayPal to be acquired at $60.50 per share in cash by Stripe and Advent International
- The deal, proposed, valued PayPal at over $53 billion.
- The offer is supported by roughly $50 billion in fully committed financing.
Stripe and private equity firm Advent International have made a joint bid to acquire PayPal Holdings for $60.50 per share, giving the digital payments company a value of over $53 billion.
The bid was made earlier this month and is supported by some $50 billion in firm financing from banks, and represents a 28% premium to the average price that PayPal shares closed on Tuesday.
This proposal comes after a first cautious overture in early April and the buyers are looking to get negotiations underway as soon as possible. The proposal may not lead to a transaction.
Transaction Would Form Global Payments Leader
Together, the duo would soon scale as one of the biggest online payments companies in the world, with approximately $3.7 trillion in annual payment volume processed. Under the proposalStripe and Advent would own an equal stake in PayPal, rather than splitting up the business.
The transaction would combine the merchant front of Stripe with PayPal’s more than 430 million consumer accounts, as well as Venmo, consumer payment services and digital wallet power.
Further, the merger could lessen Stripe’s dependency on payment processors like Visa and Mastercard while allowing it to further its stablecoin-based payments plans through its crypto arm, Bridge.
PayPal Continues Turnaround Efforts
In recent years, PayPal has been facing increasing competition from Apple Pay, Google Pay and others. The company’s market cap hit roughly $360 billion in 2021 before falling to approximately $36 billion earlier this year. Over the last year, it has fallen by more than 40% in market value.
Following that, in March when Enrique Lores became the company's CEO he initiated a turnaround plan by reorganising business into three operating units: checkout, consumer financial services namely Venmo and payments and crypto.
In the first quarter, PayPal posted revenue of $8.35 billion that beat analysts’ forecasts; total payment volume increased 8% year over year on a currency-neutral basis to roughly $464 billion.
Payments Sector Sees More Consolidation
The suggested acquisition comes on top of growing merger and acquisition activity in the global payments space as companies look for more scale and exposure to higher-growth areas of payments.
Stripe, a private company, was valued at $159 billion in an offer in February and is also expanding payments, financial services and cryptocurrency operations
Source: Reuters
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