PayPal has a message for the suitor circling it: not at that price. Fresh off a better-than-expected quarter, the payments company signalled it thinks a $53.4 billion cash takeover offer from rival Stripe and private-equity firm Advent International undervalues it — without quite slamming the door shut.
On its second-quarter earnings call, chief executive Enrique Lores stopped well short of putting the company up for sale, but said PayPal would consider any path that created “superior value” for shareholders. “If we see levers or a path that we believe would create superior value for our shareholders than executing our current strategy, we would, of course, carefully consider them,” he told investors.
The offer on the table
The bid, first reported in mid-July, values PayPal at $60.50 a share in cash, a 28% premium to where the stock had been trading, and sent the shares up 17% on the day it surfaced. It is backed by roughly $50 billion in committed bank financing, with Stripe, Advent and Block chipping in $17 billion of equity. Stripe itself is valued at around $159 billion and was reportedly weighing a PayPal deal as far back as February.
PayPal’s argument is that the number is too low. An analysis from financial-services firm Cantor pegged fair value closer to $70 a share, well above both the offer and the roughly $58 the stock trades at.
A turnaround worth defending
Lores would rather back his own plan. PayPal reported adjusted profit of $1.38 a share, ahead of the $1.28 analysts expected, on revenue up 5% year-on-year to $8.68 billion, and generated $1.8 billion in adjusted free cash flow. The company is midway through an AI-focused overhaul that has reorganised it into three divisions and targets at least $1.5 billion in gross run-rate savings over the next two to three years. “We believe that executing the transformation strategy I have outlined will create significant value for shareholders,” Lores said.
The stand-off leaves PayPal doing two things at once: proving its own plan can lift the share price, while daring Stripe and Advent to come back with a bigger number.
