Stripe, Advent make $53bn bid to acquire PayPal
Stripe and private equity firm Advent International have jointly offered to acquire PayPal Holdings Inc. for $60.50 per share, valuing the online payments company at more than $53 billion, according to two people familiar with the matter.
The offer, submitted earlier this month, is reportedly backed by about $50 billion in committed bank financing and represents a premium of roughly 28% over PayPal’s closing share price on Tuesday.
The sources, who spoke on condition of anonymity because the discussions are confidential, said PayPal, Stripe and Advent have declined to comment on the proposed transaction.
If completed, the merger would unite two of the world’s largest online payments platforms, creating a company that processes an estimated $3.7 trillion in annual payment volume.
According to the sources, the proposal follows an initial approach made in early April. Stripe and Advent have yet to receive a response from PayPal but hope to move discussions forward in the coming weeks.
Under the proposal, Stripe and Advent would each own a 50% stake in PayPal, with no plans to break up the company. However, the sources cautioned that there is no guarantee a deal will be reached.
News of the offer sent PayPal shares up nearly 17%.
Founded in the late 1990s, PayPal helped pioneer digital payments but has faced increasing competition from rivals such as Apple Pay and Google Pay as consumer payment preferences have evolved.
The company has struggled with slower growth and mounting competition in recent years, erasing much of the market value it gained during the COVID-19 pandemic. Its market capitalisation peaked at about $360 billion in 2021 before falling to around $36 billion earlier this year. Over the past 12 months, its shares have lost more than 40% of their value.
PayPal has also been undergoing a strategic overhaul since Enrique Lores became chief executive in March. The company has reorganised its operations into three divisions covering checkout services, Venmo and consumer financial services, and payments and cryptocurrency, alongside broader management changes aimed at accelerating growth.
Despite the premium offered, William Blair analyst Andrew Jeffrey suggested the bid may not be attractive enough for PayPal’s leadership.
He said the company’s new chief executive was unlikely to accept what could be viewed as a low initial offer, adding that Stripe and Advent could potentially increase their bid to around $70 per share.
Analysts say the proposed acquisition offers significant strategic benefits.
Stripe’s business has largely focused on serving merchants, while PayPal brings more than 430 million consumer accounts and established digital payment and banking relationships.
Bryan Bergin, an analyst at TD Cowen, said PayPal’s consumer business could significantly accelerate Stripe’s ambitions to expand its digital wallet services.
The acquisition would also give Stripe ownership of Venmo’s peer-to-peer payments network and PayPal’s widely used online checkout platform.
Industry observers say combining the two businesses would enable more transactions to be processed within their own network, reducing dependence on payment processors such as Visa and Mastercard. This could lower transaction costs and improve profitability.
The deal could also strengthen Stripe’s push into stablecoin payments by providing a large consumer base through which to expand adoption of digital currency payment services. Stripe has recently increased investment in its cryptocurrency business through its subsidiary, Bridge.
A potential PayPal acquisition would be the latest in a series of major mergers and acquisitions in the global payments industry, where companies are seeking greater scale and faster-growing business segments amid rapid advances in financial technology and artificial intelligence.
The sector has seen several notable transactions in recent years, including Global Payments’ agreement to acquire Worldpay for $24.25 billion, as well as Canadian payments company Nuvei’s acquisition of Payoneer Global for $2.75 billion.
Meanwhile, Mastercard is reportedly considering selling a majority stake in its UK payments subsidiary, Vocalink, back to British banks.
Despite its challenges, PayPal reported stronger-than-expected financial results in the first quarter, with revenue rising 7% to $8.35 billion, surpassing analysts’ forecasts. Total payment volume increased 8% year-on-year, reaching approximately $464 billion on a currency-neutral basis.
The company has also announced plans to use artificial intelligence to streamline operations and reduce duplication across its workforce, with expected savings of about $1.5 billion over the next two to three years. Those savings are expected to be reinvested to support future growth.
Stripe, which remains privately held, is one of the world’s most valuable fintech companies. It was valued at $159 billion during a share sale earlier this year, a sharp increase from the previous year’s valuation.
Founded in 2010 by brothers Patrick and John Collison, Stripe provides businesses with tools to accept payments, make payouts and automate financial operations.
Source: Reuters
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