Stripe and Advent in talks to buy PayPal

Stripe and private equity firm Advent International are in talks to acquire PayPal, according to the Wall Street Journal, with a deal potentially announced in the coming weeks. The two companies offered $60.50 per share in July, valuing PayPal at $53 billion, but PayPal rejected the bid as too low. Negotiations have since continued, with a higher price under discussion Source: TechCrunch. PayPal shares rose about 1.8% on the news Source: The Next Web.

The deal's shape

If completed, Stripe and Advent would each hold equal stakes and become joint owners, with no plans to break up PayPal, according to Reuters Source: Engadget. The combined entity would process roughly $3.7 trillion in payments annually, combining Stripe's merchant-side volume of $1.9 trillion with PayPal's 440 million consumer accounts Source: The Next Web. A merger could reduce Stripe's reliance on Visa and Mastercard and allow it to integrate Venmo, PayPal's checkout, and crypto products Source: Engadget.

Regulatory hurdles

Analysts expect significant antitrust scrutiny. George Paul, an antitrust partner at White & Case, said the deal "combines two sides of the digital payment player market," owning both merchant infrastructure and consumer wallets Source: The Next Web. The Federal Trade Commission or Department of Justice would review the deal, and while a courtroom battle is unlikely, conditions are probable. Divestitures of Venmo or Braintree are the likeliest remedies, with interoperability mandates as an alternative Source: The Next Web. Reviews could span multiple jurisdictions and take years.

PayPal's motivation

PayPal's new CEO, Enrique Lores, who joined in March, has been implementing a turnaround plan, splitting the company into three units and planning a 20% workforce reduction over two to three years Source: TechCrunch. The sale talks suggest Lores may see a sale as the best path forward, though PayPal declined to comment Source: TechCrunch.