PayPal Board Calls $53 Billion Stripe-Advent Bid Inadequate

PayPal’s board believes the $53 billion takeover offer from Stripe and Advent International offered on July 15 undervalues the company. According to a report from Reuters, the development could potentially open negotiations over price, deal structure and regulatory risk.

PayPal has not formally responded to the $60.50-per-share proposal, but the board’s preliminary assessment, according to the report, is that the offer does not fully reflect the value management could create by completing its turnaround. The bid represents a 28% premium to PayPal’s share price before the approach became public.

Price is only one obstacle. PayPal’s directors are examining whether the bidders can complete the financing, how regulators might view the combination and how long approval could take. Stripe and PayPal are two of the most widely used online payments platforms, and together process about $3.7 trillion annually. The board is also considering whether other bidders could emerge, although the transaction’s size limits the pool of potential buyers. Reuters described Stripe and Advent as the “most serious bidder” to surface so far.

The consortium has assembled roughly $50 billion in financing from J.P. Morgan and Morgan Stanley, which are also advising the bidders. Stripe and Advent would contribute $17 billion in equity and own PayPal equally rather than divide it immediately. Advent’s experience in payments could become especially important during an antitrust review. The private equity firm has previously invested in Worldpay, Vantiv and Nuvei, giving it a potential landing place for assets that regulators might require the combined company to sell.

One possible remedy would involve separating PayPal’s Braintree operation or other businesses and transferring them to Advent. That would reduce overlap between Stripe and Braintree, which both provide payment infrastructure to large digital merchants. Block initially joined Stripe and Advent in approaching PayPal in April but withdrew before the current offer was submitted.

For Stripe, PayPal would add a large consumer network, the Venmo wallet and a recognizable checkout credential to its merchant-processing platform. Stripe reportedly recruited Advent because financing the full equity contribution alone would be difficult. Advent also gives the group greater flexibility to restructure the transaction around regulatory objections.

PayPal’s board must now compare the certainty of a cash offer with the uncertain upside of CEO Enrique Lores’ turnaround. Investors will look to PayPal’s July 28 earnings report for evidence that branded checkout is stabilizing after weaker guidance and slowing growth made the company vulnerable to an approach.

PYMNTS has followed both sides of that calculation. Initial coverage detailed the $53 billion Stripe-Advent proposal, while subsequent analysis examined how PayPal’s wallet could become Stripe’s next growth engine and why the offer highlights a shift toward consumer relationships and shopping habits. Earlier reporting covered PayPal’s $1.5 billion operational overhaul and the Venmo redesign at the center of its consumer strategy.