PayPal board views $53 billion Stripe and Advent bid as inadequate
PayPal’s board of directors views a $53 billion takeover offer from rival Stripe and the private equity firm Advent International as undervaluing the company, Reuters reported on July 16, citing a person familiar with the matter. The board also sees regulatory and financing hurdles and had not formally responded to the proposal at the time of the report.
Stripe and Advent submitted their offer of $60.50 per share in cash earlier this month, a premium of about 28 percent to PayPal’s closing price of $47.37 on July 14, according to CNBC. News of the bid emerged on July 15, when Reuters and the Financial Times first reported it, and PayPal shares closed about 17 percent higher that day. Block was part of the group’s initial approach to PayPal in April but is not part of the current proposal, according to Reuters.
JPMorgan and Morgan Stanley have provided the bidders a financing package of roughly $50 billion and also serve as advisers to the consortium, Reuters reported. Stripe and Advent are contributing $17 billion in equity and would hold equal stakes, keeping PayPal intact rather than breaking it up.
Combining Stripe and PayPal, the two most widely used payment platforms for internet merchants, would create a company processing some $3.7 trillion in annual volume, according to Reuters. To address possible antitrust objections, the consortium has considered remedies including separating PayPal’s Braintree unit and transferring it to Advent, which holds payments investments including Nuvei, the news agency reported.
Founded in the late 1990s, PayPal has struggled in recent years against competitors such as Apple Pay and Google Pay. Chief executive Enrique Lores, who joined from HP in February, has reorganized the company into three business lines and outlined plans to save about $1.5 billion over the next two to three years, according to reporting by PYMNTS and Reuters. The board’s preliminary view is that the offer does not fully reflect the value that turnaround could create.
Additional board meetings are scheduled, and the consortium remains interested in reaching an agreement, Reuters reported. PayPal, Stripe, Advent, JPMorgan and Morgan Stanley all declined to comment.
