PayPal turned down $60.50 a share in July. That offer valued the company at $53 billion, and it still wasn’t enough to close a deal.
Stripe and private equity firm Advent International are in talks to buy PayPal, according to the Wall Street Journal. The two are now discussing a potentially higher price per share, and if things hold together, a deal could be announced in the coming weeks.
Could. The talks might still fall apart.
The number that explains why PayPal is a target
Before the offer landed, PayPal was trading at historic lows and worth around $40 billion, the Journal said. At the peak of the COVID pandemic, it was worth roughly $320 billion more.
That’s the whole story in one line. A company that was one of the defining stocks of the lockdown era is now cheap enough that a private buyer and a rival can credibly bid for the entire thing.
And PayPal’s board still said no at $53 billion. Which tells you the people running it think the floor is higher than the market does.
What Stripe would actually get
Stripe and Advent would each hold an equal stake and become PayPal’s joint owners, Reuters reported in an earlier story about the offer. They have no plans to break up PayPal.
That last detail matters more than the price. Buyers who intend to strip a business for parts usually say so, or at least leave the door open. Keeping PayPal whole means the target here is scale, not asset sales.
The combined company would process around $3.7 trillion in payments a year, Reuters said, making Stripe one of the largest online payment companies in the world.
The Visa and MasterCard problem
Here’s the strategic logic. A Stripe-PayPal merger could reduce Stripe’s reliance on Visa and MasterCard, as Reuters explained.
Every card transaction Stripe processes today runs through rails it doesn’t own and pays fees it doesn’t set. PayPal comes with its own balance-to-balance network and a consumer base that already keeps money inside it.
Stripe would also be able to fold Venmo, PayPal’s checkout system and its crypto features into its own products. Venmo alone is the piece Stripe has never had: a consumer brand people use by name.
What this does to the turnaround already underway
PayPal named a new CEO in March, Enrique Lores, who has been trying to turn the business around. Lores split the company into three units, one focused on checkout, one on Venmo and one on payments and crypto.
It’s unclear how that structure would survive an acquisition.
Worth noticing, though, is how neatly those three units map onto the assets Stripe reportedly wants. Checkout, Venmo, crypto. A company organized into exactly the pieces a buyer would want to absorb is a company that’s easy to absorb.
What to watch
The number to track is the price per share. July’s $60.50 got rejected against a roughly $40 billion market value, meaning PayPal’s board wanted a premium well past the one already on the table.
Whatever figure surfaces in the coming weeks is the real signal here. If it’s meaningfully above $60.50, Stripe wants this badly enough to overpay for a business the public markets had written down. If the talks go quiet instead, PayPal’s board decided it can fix itself faster than a buyer can.
