- Stripe-Advent no longer pursuing PayPal, source says
- Analysts flag valuation gap, regulatory hurdles
- PayPal stock down 12% in morning trading
- Consortium made $53 billion bid, Reuters reported
Aug 28 (Reuters) - PayPal shares fell 12% in morning trading on Friday, after reports that a consortium of buyout firm Advent International and payment processor Stripe had abandoned plans to buy the fintech pioneer.
The group is no longer pursuing a deal for PayPal, a person familiar with the matter said, requesting anonymity to discuss confidential information.
The development will likely sharpen focus on the turnaround under new CEO Enrique Lores, with investors weighing whether the promising early progress can translate into sustained momentum.
Advent and Stripe had made a $60.50-per-share, or about $53 billion, offer for the payments company that was once seen as the crown jewel of American financial technology, Reuters reported in July, citing sources.
The offer was a fraction of the roughly $360 billion valuation PayPal commanded at the height of the pandemic-era boom in 2021. The company's board considered the initial offer inadequate, sources have said previously.
"The consortium and PayPal ultimately did not see eye-to-eye on the value of the business. Add to that the regulatory challenges that a transaction of this size would likely face, and it appears Stripe may have decided the juice wasn't worth the squeeze," said Troy Hooper, co-head of ECM US at Mergermarket.
Bloomberg News was the first to report that the Advent-Stripe consortium had abandoned its buyout plans.
PayPal continues to trade at a discount to its peers, with a forward price-to-earnings ratio of 10.85 versus an industry median of nearly 15, according to data compiled by LSEG.
"PayPal's management is unlikely to accept a price that is not meaningfully above $70, and it was unclear to us whether Stripe/Advent can even afford a price which is meaningfully above their $60.5 bid," analysts at Bernstein wrote in a note.
In the recent earnings call, Lores did not comment on the takeover speculation but said PayPal would carefully consider any opportunity or strategic option that it believes could create superior value for shareholders.
The company's shares were last trading at $54.26. They have gained nearly 30% since Reuters reported on the bid.
PayPal had a market capitalization of about $53 billion as of last close, roughly in line with the consortium's offer price.
THE QUEST FOR A COMEBACK
PayPal has struggled to regain its footing after the pandemic-fueled surge in online shopping and digital payments faded and customers returned to brick-and-mortar stores.
Apple and Google expanding their digital payment services by integrating them into smartphone ecosystems has eroded the company's core market share.
Over the years, PayPal has responded to the challenges with sweeping changes, including management reshuffles, workforce reductions and a renewed focus on higher-margin products.
"Accelerating growth and reclaiming ground in areas where it has fallen behind will be critical. PayPal needs to win back market share in its high-margin branded checkout business, where native mobile payment options like Apple Pay and Shop Pay have gained traction," Hooper said.
Last month, PayPal doubled down on its turnaround plan, raising its 2026 profit forecast and outlining cost-saving steps.
The market has largely reserved judgment.
"Results under new CEO Enrique Lores have so far been largely positive, which inspires some confidence in his ability to affect a turnaround," Morningstar analysts said.
Meanwhile, the industry is looking to agentic commerce as the next growth engine, with AI agents taking on more tasks, including finding and purchasing products on behalf of consumers.
"We believe agentic commerce could be a meaningful opportunity given PayPal's unique structural position and large customer and merchant relationships, although adoption remains early and the competitive landscape is fluid," Raymond James analysts wrote in a note.
Reporting by Manya Saini and Arasu Kannagi Basil in Bengaluru and Milana Vinn in New York; Editing by Shilpi Majumdar and Sriraj Kalluvila
Source: Reuters