Payment processing firm Stripe Inc. and private equity firm Advent International have made a joint offer to acquire PayPal Holdings Inc. for more than $53 billion. The offer price is $60.50 per share, which represents approximately a 28% premium to PayPal’s closing share price on Tuesday. The proposed acquisition is backed by around $50 billion in committed financing from banks. This offer follows an initial approach made in early April, but PayPal has yet to respond, with Stripe and Advent seeking to advance discussions in the coming weeks.
Under the terms of the proposal, Stripe and Advent would jointly own PayPal, each holding an equal stake, rather than proceeding with a company breakup. There is no guarantee that this approach will result in a transaction. PayPal, founded in the late 1990s, was an early leader in digital payments but has recently faced increasing competition from rivals like Apple Pay and Google Pay, and has seen its market capitalization drop significantly from its peak of about $360 billion in 2021 to as low as roughly $36 billion this year. Over the past 12 months, the company has lost more than 40% of its market value.
PayPal's CEO, Enrique Lores, who took over in March, has been implementing a turnaround strategy aimed at simplifying the company and refocusing on growth. This includes splitting operations into three units covering checkout, consumer financial services (Venmo), and payments and crypto, along with management changes. In the first quarter, PayPal's revenue rose 7% to $8.35 billion, exceeding analysts' average estimate of $8.05 billion. Total payment volumes, on a currency-neutral basis, increased by 8% year-over-year to about $464 billion. Stripe, the private company involved in the bid, was valued at $159 billion in a February tender offer.
