IZettle is sold to PayPal just prior to IPO

IZettle finalized its deal to be bought by PayPal Holdings for $2.2 billion the evening before the Swedish fintech startup was set to price its shares in an initial public offering.

It looked like an abrupt aboutface for the company, which competes with Square Inc. and Canada’s Shopify Inc. On May 8 it announced it was seeking to raise 2 billion kronor ($226.6 million) in an initial public offering to be completed this year. Yet just days later, it’s been bought by a U.S. competitor.

Square shares fell as much as 3 percent as the market opened in New York Friday, but at 10:12 a.m. in New York were up less than 1 percent.

The decision from iZettle comes just over a month after Spotify became arguably Europe’s largest startup to refuse to sell up to a U.S. or Asian investor, listing on the New York Stock Exchange for about $27 billion.

“IZettle’s goal was to go for an IPO — there was no real dual track,” said Johan Brenner, general partner at Creandum, an investor in iZettle. “The PayPal discussion became concrete extremely late and was only a done deal late last night.”

IZettle had been planning to price shares for its IPO on Friday, according to a person with direct knowledge of the deal who did not want to be named discussing a private negotiation. PayPal made a las-minute approach, said the person, who asked not to be named discussing a private negotiation, adding that there was no sale process or auction.

IZettle Chief Executive Officer Jacob de Geer on May 8 said the company was “fully focused” on the IPO plan announced that morning.

In an interview Thursday, de Geer said he changed his mind after meeting with the executive team at PayPal. He was convinced that his company could continue to grow substantially under the new owner