The News
Payment processor Stripe and private-equity firm Advent International have made a $53 billion joint bid to buy PayPal, according to people familiar with the matter.
PayPal, whose shares have lingered close to 10-year lows, isn’t interested in a deal with the bidding group at this time, these people said. PayPal’s board will still meet to discuss the offer in the coming days, one of those people said.
PayPal has been working with investment banks on takeover and activist defense for the last few months and had already shrugged off initial overtures from Stripe, Semafor reported earlier this year. Some of those advisors are now helping the company deal with Stripe’s formal bid — details of which are relatively closely held even within PayPal.
But Advent has brought its own financing muscle to the offer, allowing the bidding group to offer $60.50 per share, a 28% premium to PayPal’s Tuesday close, according to Reuters, which first reported the joint approach.
Spokespeople for PayPal and Stripe declined to comment. A spokesperson for Advent didn’t respond to a request for comment.
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Rohan’s view
Stripe, most recently valued at around $150 billion, is the US’ fourth-largest credit-card processor and is set to organically cross the $1 trillion mark in the US alone; PayPal is the sixth. While a combined Stripe-PayPal would still be outmatched by Global Payments and JPMorgan, combining forces would help both companies compete. The two companies also have separate core competencies, with Stripe focused on merchants and PayPal embracing 430 million consumer accounts.
People close to PayPal say they’re aware of the frustrations investors feel toward a company that has, time and again, failed to turn itself around. A profound credibility gap — one that predates CEO Enrique Lores’ and predecessor Dan Schulman’s tenure — presents an opportunity for Stripe to strike, and an impetus for PayPal to engage.
But Stripe’s growth — and the combined scale of the businesses — presents antitrust risk both at home and abroad if the companies were to merge. European and other regulators have historically afforded similar deals tremendous scrutiny, even as the US takes a lighter touch approach to merger enforcement under President Donald Trump.
Notable
- Advent has experience investing in payment processing: One of its most successful ventures was the carving out of Worldpay from RBS in 2010 alongside Bain.