Why PayPal's Board Isn't Convinced by Stripe-Advent's $53-Bn Bid

PayPal's board believes a $53-billion takeover proposal from rival Stripe and private equity firm Advent International does not fully reflect the company's long-term value, according to a Reuters report.

The board is evaluating the offer alongside management's turnaround plan and the possibility of rival bids. While the proposal offers a premium over PayPal's recent share price, directors believe the company could deliver greater value if its strategy succeeds, the report said.

PayPal shares ended about 2% higher on Thursday after news of the bid. However, the stock slipped 1.7% in premarket trading on Friday.

Board Reviews Deal Risks Beyond Valuation

Apart from the price, PayPal's board is also examining how likely the deal is to be completed. According to the news agency, directors are assessing whether the buyers have secure financing, the potential regulatory hurdles and the time it could take to close the transaction. The board is expected to hold more meetings before taking a decision.

If completed, the combination of Stripe and PayPal would create one of the world's largest online payments companies, processing about $3.7 trillion in annual payment volume. PayPal has faced increasing competition from digital payment services such as Apple Pay and Google Pay in recent years, while management has been working to revive growth and improve its share price.

Stripe, Advent Secure Financing for Bid

To strengthen their proposal, Stripe and Advent have lined up around $50 billion in financing from JPMorgan and Morgan Stanley, Reuters reported, citing people familiar with the matter. The two firms are also advising the bidding consortium.

The buyers are contributing about $17 billion in equity to fund the acquisition. Under the proposal submitted earlier this month, Stripe and Advent would jointly own PayPal with equal stakes instead of splitting up the business.

The consortium has also discussed possible changes if regulators raise antitrust concerns. One option under consideration is separating PayPal's Braintree payments business or other assets and transferring them to Advent, which could combine them with its existing payments investments, including Nuvei.

Talks Continue as Investors Watch Earnings

Despite the board's reservations, the news agency reported that Stripe and Advent remain the most serious bidders for PayPal and are still keen to reach an agreement. However, negotiations are expected to take time.

Earlier this year, Block had joined Stripe and Advent in exploring a deal for PayPal, but it exited the consortium before the latest offer was submitted.

Investors are now expected to closely watch PayPal's July 28 earnings for signs that its core checkout business is recovering after the company issued a weaker-than-expected outlook earlier this year and warned of slowing momentum in that segment. The report added that the scale of the deal and potential regulatory scrutiny could also limit interest from other potential buyers.