PayPal's board has deemed a $53 billion takeover bid from rival Stripe and private equity firm Advent International as insufficient, according to sources familiar with the matter. The offer, which values PayPal at $60.50 per share and represents a 28% premium to its recent closing price, is considered to undervalue the company's future growth potential under current management. The board is also reportedly concerned about the certainty of financing for the deal and potential regulatory obstacles.
The consortium, consisting of Stripe and Advent, is attempting to address these concerns. JPMorgan and Morgan Stanley have provided a roughly $50 billion financing package. Stripe and Advent are contributing $17 billion in equity to the offer. Under the proposed structure, both companies would jointly own PayPal, each holding an equal stake, rather than breaking up the company. They are also considering strategies like separating PayPal’s Braintree business or other assets to transfer to Advent, potentially combining them with Advent's existing payments investments like Nuvei, to alleviate antitrust worries.
This bid follows an initial expression of interest in April. While the consortium is pushing to advance discussions, PayPal has not formally responded to the proposal. Analysts suggest that if the current offer is an opening move, Stripe and Advent might be willing to increase their bid to as high as $70 per share. Experts note that a successful acquisition could create the world's largest merchant acquirer, combining Stripe’s approximately $1.9 trillion in annual payment volume with PayPal's nearly $1.8 trillion, for a total of about $3.7 trillion.
The acquisition would complement Stripe's merchant-focused business by adding PayPal's more than 430 million consumer accounts and expanding its consumer payment capabilities. It would also grant Stripe access to Venmo's peer-to-peer network and PayPal's consumer checkout platform. For Advent, the deal would be one of its largest, leveraging its extensive experience in the payments sector, including past investments in Worldpay and Nuvei.
