PayPal takeover bid sharpens pressure on turnaround as rivals gain ground

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PayPal takeover bid pressures turnaround

Highlights

PayPal rejected a $53 billion buyout offer from Stripe and Advent International, with the board viewing $60.50 per share as insufficient.
Apple Pay surpassed PayPal’s U.S. market share by 10 percentage points in 2023 as competition from Apple, Google, Samsung, Stripe, and Affirm intensifies.
Upcoming quarterly earnings this month will influence both PayPal’s board stance on a sale and potential bidder valuation, with analysts split on PayPal’s turnaround prospects.

Bid terms and board stance

As reported by Reuters, PayPal received a $53 billion offer this past week to be taken private by Stripe and Advent International, but the board believes $60.50 a share is not enough, according to people familiar with the matter.

The San Jose, California-based company, founded in 1998 and spun off from eBay in 2015, once reached a market value of $360 billion in 2021. It is now assessing whether its payments ecosystem, including more than 400 million consumer accounts and its merchant checkout operations, carries greater value as a single company or as separate assets that could be sold individually.

People familiar with the company's deliberations said some board discussions focus on whether the current proposal is sufficient to justify opening negotiations at all. The board is also weighing whether PayPal could be worth more if it meets targets in its latest turnaround effort, while Wall Street analysts believe Stripe and Advent can afford to raise their offer after assembling $17 billion in equity and $50 billion in bank financing.

Competitive strain and market implications

PayPal's strategic position has weakened as Apple Pay, Google, Samsung, Stripe and Affirm continue expanding payment options for consumers and merchants. According to PYMNTS Intelligence, Apple Pay's U.S. market share last year exceeded PayPal's by 10 percentage points, underscoring how mobile wallet competition has intensified.

Analysts also say PayPal has lagged rivals in digital banking, AI adoption and agentic commerce, while growth has slowed in core businesses including Venmo. Clear Street analyst Owen Lau said the company prioritized market share with aggressive pricing but did not convert that scale into attractive returns, and the firm's new coverage this past week set a hold rating with a $61 price target.

The company's next quarterly earnings report this month could shape the bidders' pricing decisions and the pressure on the board. A weak report could strengthen the case for a sale, while stronger results could support PayPal's argument that its turnaround can deliver higher value on its own, though Morgan Stanley analysts say rival bids appear unlikely.

Our earlier article covered Prologis’s escalating takeover approach for UK-listed Segro, including a third proposal valuing the warehouse and data-centre owner at £13.5bn and Segro’s refusal to open talks on the grounds that the offer undervalued the business. We noted how the standoff highlighted widening gaps over fair value, against a broader backdrop of overseas buyers targeting UK-listed companies amid relatively low market valuations.

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