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Home / Technology / PayPal agrees to buy the European fintech startup iZettle for about 2.2 billion US dollars

PayPal agrees to buy the European fintech startup iZettle for about 2.2 billion US dollars



PayPal stocks
Inc.


PYPL 1.76%

has agreed to buy European financial technology startup iZettle AB for about $ 2.2 billion, a move that American digital payment giants would catapult into hundreds of thousands of bricks (1

9659005) The acquisition, the largest in the history of PayPal, leads to a showdown between the company San Jose, California, and

Jack Dorsey

place

Inc., which has built a large payment business for coffee shops, flea market vendors, and millions of other small physical sites that have historically been overlooked by PayPal.

Stockholm-based iZettle, referred to as "Square of Europe," builds devices and technologies that use nearly 500,000 businesses in about a dozen European countries, Mexico, and Brazil to accept credit cards, in most of these Countries already have a small footprint in PayPal and plans to launch iZettle devices in some of its largest markets, including the US.

The goal of PayPal is to provide retailers who want to sell a more comprehensive range of products in stores and via digital platforms, Chief Executive

Dan Schulman

said in an interview Thursday, at a time when the competition of

Amazon.de
Inc.

and traditional retailers are fierce.

"Helping small businesses to compete with the giants in the market really resonated for both of us," Mr Schulman. The combination of PayPal's services with iZettle would enable the company to provide current and potential customers with a one-stop, full-service solution.

The deal would also help PayPal offset the loss of one of its largest companies

ebay
Inc.,


EBAY 0.13%

The online marketplace that owned the payment company until it was hived off as a separate company in 2015. PayPal shares fell more than 12% on eBay earlier this year, accounting for around one-fifth of PayPal's 2017 sales, said it would start managing the flow of payments from buyers and sellers on its website.

The shares have made up much of this decline, and after rising last year, PayPal has a market value in excess of $ 90 billion.

In the meantime, Square has moved into the area of ​​PayPal. Square Cash, a smartphone app that allows people to send money and shop online, has accumulated more than seven million users. Last month, Square agreed to buy web site builder Weebly Inc. for about $ 365 million in a deal that would give it a bigger footprint in e-commerce. Square also counts the former PayPal chief financial officer

Roelof Botha

as a board member

PayPal, which is about twice the size of Square, still has a big economies of scale. In the first quarter of 2018, the Company processed $ 132 billion, more than seven times the volume of $ 17.8 billion during the same period. iZettle, which has prepared an initial public offering, expects a volume of approximately $ 6 billion in 2018.

The rapid growth of cross-border trade and the blurring of the boundaries between online and offline sales have led to a frenzy of deal-making in the payments industry. Last year,

Vantiv

Inc. agreed to acquire $ 10.4 billion from US payments services provider Worldpay Group PLC while two private equity firms agreed to buy UK online payment processors

Paysafe group

PLC for $ 3.89 billion

PayPal and eBay had a mixed balance when it came to payment transactions. Braintree Payments Solutions LLC, which acquired $ 800 million in 2013, has mobilized Paypal's acceptance tools and introduced the popular digital money transfer service, Venmo.

But last year's deal with $ 238 million for the purchase of the payment service provider TIO Networks became "black eye" for PayPal, its chief financial officer,

John Rainey,

said this week at an investor conference. The company opted to reduce TIO after a data breach had been detected in the TIO systems that could potentially compromise the personal information of up to 1.6 million users. The systems of TIO were never integrated into PayPal.

Jacob de Geer,

CEO of iZettle, will continue and report this business

Bill ready,

Chief Operating Officer of PayPal. Mr. Ready came to PayPal as part of the acquisition of Braintree.

Mr. De Geer said in an interview that he decided to sell to PayPal instead of going public after realizing that the combination of my powers was effectively giving my company super powers.

The price is 13 times as high as 2006 $ 165 million. Mr. de Geer and iZettle co-founder

Magnus Nilsson

will be lucky after the transaction is completed, as each end of 2016 had a close to 9% stake in the company, according to iZettle's most recent corporate application. At that time, iZettle's largest shareholder was the venture capital firm Index Ventures, which reported a 12.5% ​​stake.

Evercore advised PayPal on the transaction.

JPMorgan Chase

& Co. advised iZettle.

Write to Ben Dummett at ben.dummett@wsj.com and Peter Rudegeair at Peter.Rudegeair@wsj.com

Published in the printed edition of May 18, 2018 as "PayPal acquires Fintech Startup ".


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