PayPal board rejects $53 billion Stripe-Advent offer as too low, leaving room for further talks #

PayPal’s board has concluded that the $53 billion joint takeover proposal from Stripe and Advent International undervalues the company, according to Reuters, citing a person familiar with the matter. The board’s rejection could lead to a new round of negotiations over price, deal structure, and the allocation of regulatory risk.

The $60.50-per-share all-cash offer, submitted July 15, carries a roughly 28% premium over PayPal’s share price before the approach became public. Even so, the board’s early assessment is that the bid does not adequately reflect the value PayPal’s management could generate by executing its ongoing turnaround plan. Directors are also watching to see whether competing bids emerge.

Beyond valuation, the board is examining several structural questions: whether the consortium can secure full financing for a deal of this scale, how long regulatory approval could take, and how antitrust authorities would view a combination of two of the world’s most widely used online payments platforms. Together, Stripe and PayPal process an estimated $3.7 trillion in payments annually.

To fund the offer, Stripe and Advent assembled a roughly $50 billion financing package from JPMorgan and Morgan Stanley, both of which are also advising the consortium. The two firms would contribute around $17 billion in equity and hold equal stakes in PayPal rather than dividing the business at closing.

One antitrust remedy under discussion involves separating PayPal’s Braintree payment processing unit, which competes directly with Stripe, and folding it into Advent’s portfolio of payments assets, which already includes Nuvei and previously Worldpay. Stripe initially sought Advent as an equity partner partly because financing the full equity portion independently would have been difficult, and because Advent’s involvement could offer flexibility in addressing regulatory concerns, according to people familiar with the matter.

PayPal has not issued a formal response to the proposal. With the company’s earnings report approaching, investors are watching how PayPal frames its standalone strategy relative to the takeover offer, a comparison that will likely influence any further price discussions.

Source: PYMNTS