PayPal Holdings shares rose up to 20% in premarket trading on Wednesday after Reuters said Stripe and private-equity firm Advent International made a joint takeover offer worth over $53 billion. The offer, at $60.50 per share, is about 28% higher than PayPal’s closing price on Tuesday and follows an earlier bid in April, according to sources.
The offer is said to have about $50 billion in bank financing lined up. Stripe and Advent would each own half of PayPal, and there are no plans to split up the company. PayPal, Stripe, and Advent all declined to comment.
This bid comes after a tough year for PayPal. Its shares have dropped about 35-40% in the past year, and its market value has fallen from a 2021 high of nearly $360 billion to between $36 and $42 billion before the news. PayPal handles almost $2 trillion in payments each year, has about 440 million active accounts, and is still one of the few global payment networks, along with Mastercard, Visa, and American Express, thanks in part to its Venmo platform.
A similar story about Stripe’s interest in PayPal appeared in February, but analysts then wondered if PayPal was too large and complex to be fully acquired. Stripe was last valued at about $159 billion after a February employee share sale. If the deal goes through, Stripe would quickly expand its consumer payments business. Stripe also owns Bridge, a stablecoin infrastructure provider, which could work together with PayPal’s PYUSD stablecoin, valued at around $2.9 billion. This would give the combined company a strong position in both issuing and using stablecoins.
PayPal is working on a turnaround under new leadership, splitting into three business areas: checkout, consumer financial services, and payment processing. The company aims to save $1.5 billion in costs over the next two to three years. Its branded checkout business has struggled, which hurt its latest earnings report. PayPal has not yet commented on the offer. Stripe and Advent want to keep talks going in the next few weeks, but the offer is not binding and PayPal’s board might ask for a higher price.
Some see this move as a sign that more mergers could happen in the payments industry. Fiserv shares also went up in premarket trading, and big U.S. banks have reportedly looked into buying its debit-card processing network.
