The biggest ever acquisition by PayPal was just completed by the company.
PayPal announced on Thursday that a deal worth $2.2 billion has been struck by the payments company to take over a European startup – iZettle. This startup firm has business interests in the selling of mobile credit card readers and other forms of payment platforms.
News of the acquisition resulted in a 2 per cent increase in the share price of PayPal.
The takeover would “significantly expand PayPal’s in-store presence, strengthening PayPal’s platform to help millions of small businesses around the world grow,” CEO Dan Schulman said in a statement.
PayPal would be able to bring its payments platform to 11 new countries including France, Germany, Brazil and Mexico and get attached with 500,000 stores in the markets in these countries following the acquisition of the Sweden based iZettle because the startup has already got a presence in Europe and South America. PayPal will use this existing reach of the acquired company to expand its business into new markets and target new retail stores.
The deal would also allow PayPal to engage in further expansion of its offline in the United States, United Kingdom and Australia and will also help the payments company to take on rivals Square (SQBK) which is the mobile payments platform providing company that was created by Twitter co-founder Jack Dorsey.
The digital payments market segment has also attracted the attention of tech giants of the Silicon Valley such as Apple, Amazon and Facebook who are seeking ways to enter and grow in the this digital payments market segment.
CEO Jacob de Geer will, the co-founder of iZettle, would continue as the chief of the company and would be reporting to PayPal COO Bill Ready, the companies said.
The deal is expected to close in the third quarter of 2018.
For PayPal, this acquisition was important because EBay had announced back in February this year that it would severe its relations with PayPal as its primary payments processing partner and instead chose to tie up with PayPal rival Adyen which is a Dutch firm.
PayPal was spun off in 2015 by EBay which had acquired the payments platform 2002. But EBay had continued to use PayPal as its primary transactions processor for the online transactions.
At the Nasdaq Stockholm, iZettle is valued at $1.1 billion which means that the valuation of the firm following the acquisition by PayPal has nearly been doubled. PayPal has a market capitalisation of more than $92 billion.
The deal underscores the very rapid changes that are taking place in the global market for digital payments.
iZettle was initially backed by big early-stage investors like Index Ventures and Dawn Capital.
when it was initiated as a firm, iZettle primarily functioned as a provider of credit card readers for small businesses. But the fast evolution and the advancements in the field of artificial intelligence saw the company romping up its expertise and product offerings and thereby gaining more and larger clients.
It was unclear on Thursday night whether Mr de Geer and his senior colleagues would remain with the business if a takeover by PayPal does go ahead, although sources indicated that they would be likely to.
Nasdaq-listed PayPal, which was previously part of the same company as the online auction site eBay, is a giant in the sector, disclosing in its first-quarter results last month that it processed $49bn in mobile payments during the three months to 31 March
(Adapted from Monewy.CNN.com)