From industry pioneer to its stock price plunging 80%, PayPal is rumored to be “acquired” in a $53 billion takeover by Stripe

Author: Nancy, PANews

Recently, payment unicorn Stripe was reported to have teamed up with private equity giant Advent International, planning to “take over” former payment heavyweight PayPal with $53 billion. After the news was released, PayPal’s stock price rose by nearly 17.2%.

This M&A rumor, which could potentially rewrite the global payments landscape, had already surfaced months earlier. However, to date, PayPal has still not responded officially, and both sides have not yet entered substantive negotiations.

Want to spend $53 billion to acquire PayPal—Stripe has not opened the negotiating door yet

On July 15, Reuters, citing people familiar with the matter, reported that Stripe and Advent International have jointly submitted an acquisition offer to PayPal, offering $60.5 per share, implying a total valuation of more than $53 billion, which represents a certain premium over PayPal’s current share price of about $55.5.

Although Stripe’s latest valuation, which is still not public, has risen to $159 billion—more than three times PayPal’s current market cap—given a mega-acquisition of over $53 billion, it is still difficult to complete the deal relying solely on its own capital.

According to people familiar with the matter, Stripe and Advent have obtained commitments for roughly $50 billion in bank financing, providing the primary funding support for this acquisition. After the transaction is completed, the two sides plan to jointly hold PayPal, each holding 50% equity, rather than splitting and selling PayPal’s assets as private equity funds typically do.

This deal structure is not common in the fintech industry. Usually, technology companies prefer to complete acquisitions independently in order to integrate operations quickly; private equity funds are more inclined to gain control through leveraged buyouts, and then achieve exits and maximize returns through asset reorganization, splitting and selling, and other means. By choosing equal shareholding this time, Stripe and Advent both share the capital pressure required for such an ultra-large M&A and realize complementary advantages between industry resources and capital capabilities.

In this setup, Stripe will be responsible for industry synergy and business integration, further consolidating its leading position in online payments. For Stripe, PayPal’s biggest competitive advantage is not a single business, but the complete ecosystem jointly built by consumers, merchants, and the payment network. If PayPal were broken up and sold, it would not only weaken the network effects between consumers and merchants, but also affect brand value and limit future development space. Therefore, for Stripe, retaining the value of the PayPal platform as a whole is far more strategically valuable in the long run than obtaining a few independent assets.

By contrast, Advent is playing more of the role of a “capital bridge” in this transaction. As a globally known private equity firm with deep long-term involvement in fintech, Advent not only has extensive experience in large-scale leveraged acquisitions, but is also skilled at enhancing enterprise value through optimizing operations and capital operations. Public information shows that since 2008, Advent has cumulatively invested more than $7.8 billion in 18 payment and fintech companies. One of the most representative cases is its 2024 private acquisition of Canadian fintech company Nuvei for about $6.3 billion.

Therefore, this potential deal is not a traditional financial investment in the strict sense, but more like a long-term strategic consolidation centered on the global payments ecosystem.

In fact, as early as this February, the market reported that Stripe had sent PayPal an initial acquisition invitation. According to the latest disclosures from people familiar with the matter, Stripe and Advent hoped to kick off negotiations within the coming weeks. However, whether the deal can ultimately close remains highly uncertain.

To date, PayPal has never publicly responded. However, according to foreign media Semafor’s report in February this year, at that time PayPal had not held negotiations about selling itself to Stripe or any other company, and for the past several months it had been working with investment banks in preparation for possible moves by aggressive investors or hostile takeover offers.

Market participants also speculate that Stripe’s current offer may not be enough to persuade PayPal’s board and shareholders to accept the transaction—more like a tentative bid. Considering that large M&As often require multiple rounds of games and bargaining, if Stripe wants to ultimately complete the acquisition, there is a fairly high possibility that it will further raise its offer in the future.

After PayPal’s share price fell by 80%, Stripe is targeting not just the payments business

If this deal is ultimately completed, it will become one of the most influential M&A cases in the global payments industry in recent years. This is not only a capital transaction of more than $50B, but also a change in the competitive logic of the global payments industry.

With fintech continuing to evolve and AI technology accelerating its penetration into payment scenarios, traditional payments giants are facing new competitive pressure. Even PayPal, the former “founder” of the industry, has been “left behind” by the times.

By the close on July 16, PayPal’s share price had cumulatively dropped by about 82% from its all-time high of $307.5 set in September 2021. Despite its years of accumulated consumer base, merchant network, and brand influence forming important moats, slowing growth, intensifying competition, and insufficient innovation have made it hard for PayPal to replicate its past rapid growth.

However, PayPal’s huge user base, mature payment network, and global brand influence still give it a high degree of strategic attractiveness. Bloomberg previously reported that multiple banks, financial institutions, and industry competitors had expressed interest in acquiring PayPal as a whole or parts of its business. Acquisition rumors have also driven intermittent rebounds in PayPal’s stock price, but the capital market remains cautious about its ability to grow independently.

Facing growth pressure, PayPal is also accelerating reforms. After Enrique Lores officially became PayPal CEO in March, he quickly launched a series of adjustments, including restructuring business units, replacing the executive team, focusing on core businesses such as Checkout, Venmo, and crypto payments, while advancing cost optimization and layoffs, and allocating more resources to new growth directions such as AI.

However, for the capital market, internal reforms usually mean a longer兑现 period and higher execution uncertainty. Therefore, compared with waiting for PayPal to complete its transformation independently and realize a value reappraisal through strategic M&A, the market is paying more attention.

For the newer payments giant Stripe, PayPal’s real value is not just the payments business itself, but the long-term accumulated consumer entry point. Stripe has long held advantages in enterprise payments and merchant services, but still has shortcomings in consumer payments. PayPal, on the other hand, has more than 430 million consumer accounts, a Venmo social payments network, and a mature digital wallet ecosystem. If the two sides complete integration, Stripe will be able to close the gaps in consumer payments, forming a complete payment closed loop covering both the merchant side and the user side.

More importantly, this acquisition could reshape the competitive positions of both parties in next-generation payment infrastructure.

In recent years, both Stripe and PayPal have continued to build stablecoin payment and crypto payment infrastructure. Stripe previously entered the stablecoin payments space by acquiring Bridge and recently announced that it would work with multiple companies to push a new stablecoin, OUSD. It is worth noting that after the OUSD alliance list was released, some companies such as Samsung and Dunamu said they had not officially joined the cooperation yet, sparking controversy in the market.

By contrast, besides providing crypto asset trading services, the stablecoin PYUSD issued by PayPal has become the world’s eighth-largest stablecoin, with a market cap of over $2.8 billion.

If Stripe ultimately completes the acquisition of PayPal, it will gain stablecoin issuance capabilities, payment infrastructure, digital wallet ecosystem, and merchant network resources in the stablecoin space as well, thereby strengthening its ability to compete with traditional payment networks such as Visa and Mastercard, as well as other digital payment platforms.

However, the deal is still in an early stage, and there are many uncertainties before it can ultimately close.

On the one hand, it remains unknown whether PayPal’s board is willing to accept the acquisition, and differences between both sides on valuation could also cause the negotiations to fall apart. On the other hand, such a large-scale M&A deal still has to face real challenges such as antitrust review, the stability of bank financing, and the difficulty of integrating the businesses of both sides.

But no matter whether the deal ultimately closes, this potential acquisition has already become a snapshot of changes in the payments industry’s landscape, as global payments competition is entering a new stage.