Stripe & Advent International in Renewed Talks to Buy PayPal
PayPal is once again discussing a sale of the company, this time to Stripe, one of the rivals that spent the last decade eating into its business, and the private equity firm Advent International. The Wall Street Journal reported this week that the talks have picked back up and could produce a deal within weeks, though people close to the matter caution that things could still fall through.
Back in July, Stripe and Advent floated $60.50 a share for PayPal, a bid that valued the company at around $53 billion and represented a 28 percent premium to where the stock had been trading. PayPal's board balked, deciding the offer undersold the company. Talks apparently kept going behind the scenes anyway, and now Stripe and Advent are said to be weighing a higher number. PayPal's stock has moved accordingly, climbing more than 30 percent in July alone and ticking up again on the latest reporting.
Stripe and Advent would each hold an equal stake in PayPal rather than one absorbing the other, and both have signaled they don't intend to break up the business. Roughly $50 billion in bank financing has reportedly already been lined up, with Stripe and Advent splitting the equity contribution.
Stripe, started by brothers Patrick and John Collison, built its reputation as the developer-friendly upstart that made PayPal look clunky by comparison, and it's been steadily pulling merchants away for years. It's now privately valued around $159 billion, with some secondary market trades suggesting investors think it's worth even more than that. A combined Stripe-PayPal would process something like $3.7 trillion a year, instantly making it one of the largest payment networks on the planet, and it would give Stripe a way to lean less on Visa and Mastercard's rails. Advent, for its part, is a Boston-based firm with more than $90 billion under management and a track record in financial services deals.
Enrique Lores took over as PayPal's CEO in March, brought in from HP after the board lost patience with predecessor Alex Chriss's turnaround efforts. He's since reorganized the company into three units, one for checkout and core PayPal, one for consumer products like Venmo, and one for payments and crypto, and he's pushing a cost-cutting plan that could eliminate up to a fifth of the workforce over the next few years. Lores has also talked about repositioning PayPal as more of a technology company, leaning harder into AI.
Before the July offer surfaced, PayPal's stock was trading near historic lows, with the company's market value briefly dipping to around $40 billion, a fraction of the roughly $320 billion it was worth at its pandemic peak. Not everyone is sold on the logic of a deal in the first place, either. An analyst at William Blair called the original bid a lowball offer and questioned why Stripe would even want to take this on.
Putting PayPal and Stripe under the same roof would combine two of the biggest names in online payments, and any agreement would likely draw close scrutiny from antitrust authorities in both the United States and Europe. How exactly Stripe and Advent would split the financing on a deal this size hasn't been disclosed, and PayPal has yet to comment publicly on any of it. Stripe, for its part, has only said it doesn't comment on rumors or speculation.
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