IZettle scraps IPO plan, sells itself to PayPal

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

It looked like an abrupt about-face for the company, which competes with Square Inc. and Canada’s Shopify Inc.

On May 8 it announced it was seeking to raise about $225 million in an initial public offering to be completed this year. Yet just days later, it has been bought by a U.S. competitor.

Square shares fell as much as 3% as the market opened Friday but soon were back in positive territory; they ended the day up 0.4% at $55.04. Paypal shares climbed 2% to $80.79.

The decision from IZettle comes a little more than a month after Spotify became arguably Europe’s largest start-up to refuse to sell 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 last-minute approach, the person said, adding that there was no sale process or auction.

IZettle Chief Executive Jacob de Geer said May 8 that 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 and that their cultures would be aligned.