Acquisitions: PayPal to take on Square with $ 2.2 billion payments deal
PayPal, in a strategic move to expand globally and fend off rival Square, agreed to pay $ 2.2 billion to buy Swedish mobile payments startup iZettle, the companies said late Thursday.
PayPal swooped in with an offer just as iZettle was in the final stages of preparing for an initial public offering.
“As you might have heard, we were preparing the company for a potential IPO,” iZettle CEO and co- founder Jacob de Geer wrote in a post on his company’s website. “But plans sometimes change. Late in the IPO process, PayPal got in touch and showed a serious interest in iZettle.”
The deal is PayPal’s largest acquisition ever and will help the San Jose company expand into new markets, including Northern Europe and Latin America, where it now has only “minimal brick and mortar presence,” according to a research note from Colin Sebastian, senior research analyst with Baird Equity Research.
iZettle makes a card reader similar to Square’s familiar device, as well as more sophisticated hardware that take chip- card and phone payments. It also offers retail and e- commerce software.
“At first glance we view the acquisition of
iZettle as a worthy accelerant for PayPal’s ambitions to expand geographically as well as across a broader range of small and mid- sized businesses,” Sebastian said. “This marks a more concerted effort to expand market share outside of the
U. S., while potentially acting as a testing ground for bringing new product offerings stateside.”
On May 8, iZettle said it sought to raise $ 226.6 million in an initial public offering to be completed this year. PayPal stepped up with an offer the night before the 8- year- old Stockholm company was set to price its shares, Bloomberg News reported.
In his post, de Geer said he’s talked to PayPal for years “about different ways of working together. But this time, it very quickly turned into a detailed discussion on how we could benefit from joining forces.”
IZettle was founded in 2010 by de Geer and Magnus Nilsson, producing a mini chip card reader and software for mobile devices. In a statement, PayPal CEO Dan Schulman noted how much iZettle has since grown, which explains his company’s interests.
“Today, the company’s commerce solutions empower nearly half a million merchants across 12 countries and two continents to get paid, sell smarter and grow their businesses,” Schulman wrote. “Upon closing, we will gain in- store capabilities in 11 markets, near- term in- store expansion opportunities into other existing PayPal markets.”
Schulman said he expects the deal to close in the third quarter. De Geer will continue to lead iZetttle and report to PayPal Chief Operating Officer Bill Ready, Schulman said.