Stripe and Advent International have walked away from their roughly $53 billion attempt to buy PayPal.
Had it gone through, the deal would have been the biggest fintech takeover on record. The announcement sent PayPal’s stock down sharply before Friday’s open.
Why didn’t Stripe and Advent acquire PayPal?
Stripe, the privately held payments firm, and the private equity house, Advent, have abandoned their bid to acquire PayPal at $60.50 a share ($53 billion). Back in April, Block joined Stripe and Advent as a third partner, then exited before the formal bid was made.
PayPal’s directors judged the Stripe-Advent bid as too low, despite the pair offering a 28% premium over PayPal’s price at the time. There was a resulting standoff in which the board refused to send a formal response to the deal. It was during this period that the suitors pulled out.
Stripe acquiring PayPal, which is one of its major competitors, would have led to the combination of merchant services, consumer wallets like Venmo, cross-border transfers, and stablecoin products, making Stripe a massive player in the payments world.
Interestingly, just before the PayPal deal fell apart, Stripe announced another big purchase, agreeing to buy an AI model marketplace called OpenRouter for more than $8 billion. Cryptopolitan initially reported that OpenRouter would be acquired for more than $7 billion.
Why is PayPal’s stock down?
PayPal shares closed Thursday at $61.47 and then dropped about 14% to $52.77 in premarket trading on Friday. The decline has now reached as much as 16%.
PayPal’s stock recently gained more than 40% over the quarter, due to the pending deal and its stronger-than-expected second-quarter results. PayPal’s market value currently sits near $52.6 billion, a recovery from roughly $36 billion earlier in the year but still a long way from its peak of roughly $360 billion that it hit in 2021.
PayPal, which was founded in 1998 and based in San Jose, has spent the past year trying to remedy its slowing growth and fighting pressure from Apple Pay and Google Pay.
New chief executive Enrique Lores, who took over in March, has split the company into three divisions covering checkout, consumer financial services and Venmo, and payments and crypto. The company has also moved to cut about 20% of its staff in order to save $1.5 billion.