Stripe-Led Group Reportedly Drops Pursuit Of PayPal Acquisition
A proposed Stripe and Advent takeover of PayPal, which could have ranked among the largest leveraged buyouts on record, is reportedly no longer being pursued.
Stripe and buyout firm Advent International have reportedly abandoned plans to acquire PayPal, according to people familiar with the matter cited by Bloomberg.
The proposed transaction would have valued PayPal at more than $50 billion and could have become one of the largest leveraged buyouts ever completed. The reported decision comes after PayPal's shares gained significantly following stronger-than-expected quarterly results.
In July, when PayPal's market value had fallen to about $40 billion, Stripe and Advent were reported to have made an offer of approximately $53 billion. PayPal reportedly rejected the proposal, prompting the group to consider increasing its bid.
Stripe And Advent Face Higher PayPal Valuation
PayPal's share price subsequently rose by about 40%, helped by its latest quarterly performance and reports of potential takeover interest. The increase would have made an acquisition more expensive and potentially more difficult to finance through debt.
The company was once valued at roughly $320 billion at the height of the COVID-19 pandemic, before its market value declined substantially in the years that followed.
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For Stripe and Advent, PayPal's lower valuation had reportedly presented an opportunity to acquire the payments company at a significant discount to its previous market value. The subsequent rise in its share price appears to have changed the financial calculations surrounding a potential leveraged transaction.
PayPal Restructures Under New Chief Executive
PayPal has also been pursuing changes to its business under chief executive Enrique Lores, who was appointed in March. The company's operations are being reorganised into three areas centred on checkout, Venmo and payments and cryptocurrency.
A potential combination with Stripe could have given Stripe greater control over payment capabilities currently dependent on networks operated by Visa and Mastercard. It could also have provided access to PayPal's Venmo checkout technology and cryptocurrency features.
For now, however, the reported acquisition effort has ended. Bloomberg reported that Stripe and Advent could still consider making another offer for PayPal in the future, although no such transaction has been confirmed.
