PayPal board deems Stripe-Advent offer inadequate, sources say

• The board believes the offer undervalues PayPal despite the company's recent struggles competing against Apple Pay and Google Pay, and is weighing the bid against management's turnaround strategy
• Stripe and Advent plan to jointly own PayPal with equal stakes and have considered regulatory remedies including potentially separating the Braintree business to address antitrust concerns
• Investors will watch PayPal's July 28 earnings report for signs of stabilization in its core checkout business after the company issued weaker-than-expected guidance earlier this year

PayPal Board Rejects Stripe-Advent Acquisition Offer as Inadequate

PayPal's board has deemed a takeover bid from rival Stripe and private equity firm Advent International as undervaluing the company, according to sources familiar with the matter. The consortium's offer of $60.50 per share has not received a formal response from PayPal.

Key Deal Details:

• Total financing package: approximately $50 billion
• Equity contribution: $17 billion from Stripe and Advent combined
• Ownership structure: Equal 50-50 split between Stripe and Advent
• Financing arranged by JPMorgan and Morgan Stanley, who also serve as advisers

Board Concerns:

PayPal's board is evaluating the bid against its internal turnaround strategy, citing concerns beyond price including financing certainty, regulatory hurdles, and potentially lengthy transaction timelines. The board continues to meet on the matter and hasn't ruled out the possibility of other offers emerging.

Regulatory Considerations:

To address potential antitrust issues, the consortium has considered remedies including separating PayPal's Braintree business or other assets and transferring them to Advent, which could combine them with its existing payments investments like Nuvei.

Market Context:

PayPal has struggled recently against competitors like Apple Pay and Google Pay. Block was initially part of the bidding consortium in April but exited before the latest offer was submitted. Investors are awaiting PayPal's July 28 earnings report for signs of stabilization in its core checkout business after weaker-than-expected guidance earlier this year.

Despite reservations, sources indicate the Stripe-Advent consortium remains the most serious bidder and is interested in reaching an agreement, though negotiations are expected to take time.