PayPal rejects $53B takeover bid from Stripe-led group
What's the story
PayPal has rejected a $53 billion takeover bid from rival payment processor Stripe and private equity firm Advent International, according to Reuters. The board sees the offer as undervaluing the company and has not yet formally responded, amid regulatory and financing challenges. The rejection comes as part of PayPal's ongoing efforts to revive its share price amid competition from Apple Pay and Google Pay.
Evaluation process
Bid deemed as 'undervaluing' PayPal
The PayPal board is still reviewing the takeover bid and the possibility of other offers.
The initial assessment suggests that while the $60.50 per share offer is a premium over recent share prices, it doesn't fully reflect the potential value PayPal could create in future years.
This comes as part of a broader strategy to turn around the company's fortunes amid slowing growth rates.
Bid complications
Regulatory and financing challenges
The PayPal board is also considering other factors beyond price, such as financing certainty and potential regulatory hurdles. These could result in a long timeline to complete any transaction.
The consortium behind the bid has secured some $50 billion in financing from JPMorgan and Morgan Stanley, who are also advising them on the deal.
Future plans
Consortium's plan for potential antitrust issues
The consortium intends to take joint control of PayPal with Stripe and Advent each holding an equal stake.
However, they are also considering possible solutions if they run into antitrust regulators.
This could involve divesting PayPal's Braintree business or other assets to Advent, which could then merge those with its payments investments like Nuvei.
Strategic partnership
Advent's role in the deal
Advent, an active investor in the payments sector, joined Stripe as an equity partner to ease the burden of funding the entire equity portion of a deal.
The move could also provide the consortium with more leeway in dealing with potential regulatory concerns.
Despite PayPal's reservations over this proposal, sources say that the consortium remains interested in reaching an agreement.