Stripe and Advent International have abandoned their attempt to acquire PayPal for approximately $53 billion.
Had the deal gone through, it would have become the largest acquisition in fintech history. The announcement led to a sharp decline in PayPal's shares ahead of the market open on Friday.
Why Didn't Stripe and Advent Acquire PayPal?
Stripe, a privately held payments processing company, and investment firm Advent withdrew their attempts to acquire PayPal at a price of $60.50 per share ($53 billion). Back in April, Block joined Stripe and Advent as a third partner but exited the project before a formal offer was made.
PayPal's management considered the Stripe-Advent offer too low, even though both companies offered a 28% premium over PayPal's price at the time. This led to a standoff where the board of directors refused to give an official response to the deal. It was during this period that the potential buyers walked away.
Acquiring PayPal, one of its main competitors, would have allowed Stripe to combine merchant services, consumer digital wallets like Venmo, cross-border transfers, and stablecoin-based products, positioning Stripe as a major player in the payments market.
Interestingly, shortly before the PayPal deal fell through, Stripe announced another major acquisition, agreeing to purchase an AI-based modeling platform called OpenRouter for over $8 billion. Cryptopolitan initially reported that OpenRouter would be acquired for more than $7 billion.
Why Did PayPal Shares Fall?
PayPal shares closed at $61.47 on Thursday, then in pre-market trading on Friday fell approximately 14% to $52.77 . The drop reached 16%.
PayPal shares had recently risen more than 40% for the quarter, buoyed by the impending deal and stronger-than-expected Q2 results. PayPal's current market capitalization is about $52.6 billion, a recovery from around $36 billion at the beginning of the year but still far from its peak of about $360 billion reached in 2021.
Founded in 1998 and based in San Jose, PayPal has been trying over the past year to overcome a slowdown in its growth and compete with pressure from Apple Pay and Google Pay.
New CEO Enrique Lores, who took office in March, has divided the company into three units: Checkout, Consumer Financial Services and Venmo, and Payments and Cryptocurrencies. The company has also decided to cut about 20% of its staff to save $1.5 billion.
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