San Jose: PayPal’s board is reportedly sceptical of a $53 billion takeover proposal from payments firm Stripe and private equity giant Advent International, believing the offer undervalues the company and could face significant regulatory and financing hurdles.
According to a Reuters report, PayPal has not formally responded to the proposal, with the board continuing to evaluate the bid alongside the company’s long-term turnaround strategy.
Board weighs value against turnaround plans
The consortium has offered $60.50 per share, representing a premium over PayPal’s recent trading price. However, the board reportedly believes the proposal does not fully reflect the value the company could generate if its current business strategy succeeds.
In addition to the offer price, directors are assessing the certainty of financing, potential antitrust scrutiny and the likely timeline required to complete any transaction.
PayPal shares rose around 2% to $56.73 following news of the bid.
Financing package in place
Reuters reported that JPMorgan and Morgan Stanley have arranged a financing package worth approximately $50 billion to support the acquisition.
Stripe and Advent are expected to contribute around $17 billion in equity, with both companies jointly owning PayPal if the transaction proceeds.
None of the companies involved, including PayPal, Stripe, Advent, JPMorgan or Morgan Stanley, commented on the report.
Regulatory concerns remain
Given the combined scale of Stripe and PayPal in the digital payments industry, the proposed deal is expected to attract close scrutiny from competition regulators.
According to Reuters, the consortium has explored possible remedies, including separating PayPal’s Braintree business or other assets and transferring them to Advent to address potential antitrust concerns.
Investors await earnings
Investors are expected to closely watch PayPal’s quarterly earnings on July 28 for indications of whether the company’s core checkout business is stabilising after a period of slowing growth and weaker-than-expected guidance earlier this year.
The proposed acquisition, if successful, would create one of the world’s largest online payments companies, processing an estimated $3.7 trillion in annual payment volume.