PayPal to buy start-up on­line coupon site Honey for $4bn in largest ac­qui­si­tion

The National - News - - BUSINESS -

PayPal will ac­quire Honey Science for about $4 bil­lion (Dh14.7bn), its largest ac­qui­si­tion, ad­ding a start-up that amasses valu­able data on con­sumer buy­ing habits and doles out coupons for on­line bargains.

About 17 mil­lion peo­ple use Honey apps or web browser ex­ten­sions to find dis­counts at on­line shop­ping sites. The startup was prof­itable in 2018, PayPal said. Shares of the pay­ments gi­ant were lit­tle changed in ex­tended trad­ing.

Honey is val­ued at al­most twice what PayPal paid for its next-largest deal, iZet­tle, the Swedish provider of small busi­ness ser­vices it pur­chased in 2018, and marks the first ma­jor ac­qui­si­tion this year. Chief ex­ec­u­tive Dan Schulman has sig­nalled that PayPal, with more than $10bn in cash, is on the hunt for more deals after a string of takeovers last year that in­cluded Hyper­wal­let and Simil­ity.

“You can ex­pect us to be ac­quis­i­tive,” Mr Schulman said on a con­fer­ence call with an­a­lysts this sum­mer. PayPal looks at hun­dreds of po­ten­tial deals every quar­ter and con­sid­ers them a way to ex­pand glob­ally and ac­cel­er­ate de­vel­op­ment of new prod­ucts, he said. Mr Schulman de­scribed ac­qui­si­tions as “a part of who we are on an on­go­ing ba­sis”.

Honey, which was founded in 2012, will keep its base in Los An­ge­les, and the founders will con­tinue to run the busi­ness. The com­pany’s ser­vices in­clude a browser ex­ten­sion that au­to­mat­i­cally ap­plies coupons at e-com­merce sites.

PayPal said that Honey’s ca­pa­bil­i­ties will give its cus­tomers a bet­ter shop­ping ex­pe­ri­ence, and help mer­chants drive sales, partly with more timely and per­son­alised of­fers.

Mark Palmer, an an­a­lyst at BTIG, said the ac­qui­si­tion would help PayPal make “sig­nif­i­cant ad­vances” to­ward be­com­ing more rel­e­vant to users. It could also give cus­tomers and mer­chants a rea­son to choose PayPal “in the face of in­creas­ing com­pe­ti­tion from tech com­pa­nies, such as Face­book Pay”.

As a shop­ping-fo­cused browser ex­ten­sion, Honey has ac­cess to large amounts of cus­tomer data. Lisa El­lis, an an­a­lyst at Mof­fet­tNathanson, said that PayPal typ­i­cally uses that in­for­ma­tion for pur­poses such as fraud preven­tion. She added that if there were to be a pri­vacy issue over data at the com­bined com­pany that lim­ited its use, some abil­i­ties, such as tar­geted of­fers, could be cur­tailed.

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