Report: PayPal board considers first takeover offer to be inadequate

After the payment processor Stripe and the private equity company Advent apparently submitted a takeover offer totaling $53 billion for PayPal last week, the payment service provider itself has not yet officially commented on it. But it is now reported that the PayPal board considers the offer to be inadequate after an initial review.

Stripe and Advent want to pay $60.50 per share for the PayPal takeover. This is well above recent prices, although PayPal shares took a small jump after these plans were announced. The price was just $41 in June and had climbed to around $48 by the beginning of last week, but then jumped to almost $57 after the takeover offer was reported.

PayPal board remains confident despite long downturn

However, that is still significantly less than five years ago, when the PayPal share was still worth around $300. The market value of the payment service provider had fallen from around 360 billion US dollars to around 40 billion US dollars. Lost market shares to Apple Pay and Google Pay were blamed for this, among other things. It was also said that the company had failed to modernize its own technology and keep up with rivals. Given its global importance, the payment service provider has been considered significantly undervalued for months.

The PayPal board apparently also sees it that way, as Reuters reports. Accordingly, the directors believe that PayPal could increase in value if the new management’s restructuring plan leads to stronger growth and better returns. In May, the new CEO, who was appointed in February, announced that he wanted to lead PayPal back to calmer waters and long-term growth through restructuring and cost-cutting measures. The stock market hasn’t been convinced by this so far either. At the end of this month, PayPal will present a new quarterly report that could show initial results.

Regulatory authorities are likely to closely examine PayPal’s takeover

The PayPal board is also investigating whether Stripe and Advent can also finance the intended takeover. Such a project, which affects large payment service providers, is also likely to be examined in detail by supervisory authorities. This is also one of the factors that the PayPal board considers more closely when making a takeover offer.

Since no one from PayPal has yet officially commented on the – also unofficial – takeover offer, all eyes are now on the next board meetings and the quarterly report announced for next week. And whether Stripe and Advent are willing to increase their offer for PayPal.

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