Stripe and private equity firm Advent International have jointly offered to buy PayPal Holdings in a deal that would value the payments giant at more than $53 billion.
The bidders have made a $60.50 per share cash offer for the payments firm, according to people familiar with the deal.
The offer price represents a 28% premium over PayPal’s closing price on Tuesday and is backed by $50bn in committed bank financing already lined up.
Under the proposal, first reported by Reuters, Stripe and Advent would split ownership of PayPal evenly and keep the company intact rather than break it apart. A previous approach had been made in early April, and the two firms are reportedly hoping to advance discussions over the coming weeks.
PayPal, Stripe, and Advent have all declined to comment, and PayPal has yet to respond publicly to the offer. Investors reacted by pushing PayPal’s shares up as much as 20% in premarket trading today.
The offer comes as PayPal’s market value has slumped from a peak of near $360bn in 2021 to $36bn this year as it is squeezed by rivals such as Apple Pay and Google Pay. Shares are down more than 40% over the past year.
PayPal’s underlying business is still substantial. It reported $8.35bn in first-quarter revenue and about $464bn in total payment volume, up 8% year-over-year adjusted for currency.
Industry analysts see strategic logic behind the pairing. Combined, the two would handle close to $3.7tn a year, putting the group in the same league as the newly-merged Global Payments and Worldpay.
Chris Beauchamp, chief market analyst at investing and trading platform IG, said: “Paypal is one of those stocks that never lived up to its hype.
“It promised much but never seemed to find its footing post-Covid. It’s not alone in this, but for a company that was so ubiquitous for years, and which still owns a broad stable of brands, such underperformance is disappointing at best.
“Long-suffering shareholders finally get some relief, as the bid that was so long expected finally arrives.”
Dan Coatsworth, head of markets at AJ Bell, added: “After years of miserable share price performance, it looks like PayPal could be put out of its misery as a standalone company.
“The payments sector has long been a hive of takeover activity, and one must wonder why PayPal hasn’t already been picked off.
“Spun out of Ebay, the payments group was merrily on its way to greatness when suddenly Apple Pay and Google Pay took off and grabbed some of PayPal’s market share.
“PayPal has tried many things to fight back but has been left behind in a busy market that has also seen the likes of Stripe, Block and Adyen become credible challengers.
“The pandemic triggered an e-commerce boom as people were stuck at home in lockdown and bought items online to relieve their boredom. PayPal enjoyed a purple patch, but it didn’t last.
“If the bid rumours are true, Stripe and Advent obviously see an opportunity to buy a company that’s down but not out.
“The brand still has considerable trust among the public and business community, and it makes a decent profit. It is plugged into many of the hot payment themes including mobile payments, digital wallets and buy now, pay later. For Stripe, it provides a consumer-facing brand.
“Importantly, PayPal is dirt cheap. At its peak, the shares traded on more than 60 times earnings. They’re now on less than nine times which is the sort of rating that’s rarer than hen’s teeth in the payments sector.”
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