PayPal rises on reported $53 billion takeover offer from Stripe and Advent

PayPal shares jumped 15% in premarket trading after Reuters reported that Stripe and Advent International had made a joint offer to buy the digital payments company for more than $53 billion. For investors, the move puts a takeover premium back into focus for a stock that has lost much of its pandemic-era value.

Reuters, citing two people familiar with the matter, reported that Stripe and Advent offered $60.50 per PayPal share. That price would be about 28% above PayPal’s closing price on Tuesday, according to Reuters.

The bid was submitted earlier this month and is supported by about $50 billion in committed financing from banks, Reuters reported. Committed financing means lenders have pledged funding for the deal if the transaction moves ahead under agreed terms.

Advent declined to comment to Reuters. PayPal and Stripe did not immediately respond to Reuters requests for comment. Reuters said the people discussing the matter were not named because the talks are confidential.

How the proposed deal would work

Stripe, the privately held payments company, and Advent, a private equity firm, would jointly own PayPal under the proposal, Reuters reported. Private equity firms typically invest in companies using a mix of investor capital and debt, often with the aim of improving operations or returns over time.

The reported structure would give Stripe and Advent equal stakes in PayPal, according to Reuters. The people familiar with the talks also said the proposal does not call for breaking up the company.

Reuters reported that the latest proposal followed an initial approach in early April. PayPal has not responded to Stripe and Advent, and the two would-be buyers are seeking to move talks forward in the coming weeks, the people told Reuters.

A deal is not guaranteed. The same people told Reuters there is no certainty the approach will lead to a transaction.

Why PayPal is in play

PayPal helped define online payments after its founding in the late 1990s. Its core business has come under pressure as shoppers use more payment options and competitors such as Apple Pay and Google Pay take share, Reuters reported.

The company’s market value reached about $360 billion in 2021, according to Reuters. It later fell to roughly $36 billion this year, and PayPal has lost more than 40% of its market value over the past 12 months.

PayPal has been trying to reset the business under CEO Enrique Lores, who took over in March, Reuters reported. The company began a broad turnaround effort aimed at simplifying the payments provider and sharpening its focus on growth.

In April, PayPal split its operations into three units: checkout, consumer financial services including Venmo, and payments and crypto. Reuters also reported that the company made several management changes as part of that shift.

For retail investors tracking PayPal, the reported offer raises two separate questions: whether a buyer can agree on terms with the company, and whether PayPal’s own turnaround can restore growth if no deal happens. For now, the confirmed facts are limited to the reported approach and the market’s early reaction.

This story draws on original reporting from CNBC.