Shares of PayPal (PYPL) rocketed higher on Wednesday morning after a heavyweight bid emerged for the payments company. Stripe, working alongside private equity firm Advent, has tabled a joint offer worth $53 billion to acquire the platform, valuing it at $60.50 per share. At the time of writing, PYPL was up 16% over the previous 24 hours, extending a run that has delivered nearly 30% in gains across the past 30 days.
The Structure Of The $53 Billion Bid
The offer, put forward earlier this month, is underpinned by roughly $50 billion in committed financing from banks, one of the lenders indicated. At $60.50 a share, the proposal works out to about a 28% premium over where PayPal closed on Tuesday. It is not the first time the two suitors have circled the company; an initial approach was made back in early April. So far, PayPal has not responded to the overture, and Stripe and Advent are pushing to move the conversation forward in the coming weeks.
Will The Deal Actually Get Done?
People close to the bid say that if an agreement is reached, Stripe and Advent would split ownership of PayPal down the middle rather than carving it up into separate businesses. That comes at a moment of internal change for the company. Earlier this year, new CEO Enrique Lores split PayPal into three business units and reshuffled the leadership team, a move aimed at tightening operations and reviving growth. A successful takeover would likely hand the business a meaningful lift.
A Stock Still Below Its Peak
Even with the recent bounce, PayPal has endured a rough stretch. The stock is down 18% so far this year and sits 35% below where it traded a year ago. The company is boxed in by rivals on several fronts, from Apple (AAPL) Pay and Block (XYZ) to Stripe itself, along with buy now, pay later players Affirm (AFRM) and Klarna (KLAR). PayPal has also never managed to climb back to its 2021 record high of $310, a peak reached at the height of the pandemic when interest rates were near rock bottom. If Stripe pulls off the acquisition, the combined operation could turn into a powerhouse in the payments market, a prospect that could keep pushing PYPL higher.
What Analysts Expect
Wall Street, for its part, remains cautious. Drawing on 24 analysts who issued 12-month price targets for PayPal over the last three months, the average target sits at $47.80, with the most optimistic call at $63.00 and the most bearish at $34.00. That average actually implies a decline of 13.02% from the most recent price of $54.96.
