PayPal's board of directors has rejected a $53 billion takeover proposal from payments rival Stripe and private equity firm Advent International, according to sources cited by Reuters, on the grounds that the bid undervalues the company. The approach, which would have been one of the largest tech acquisitions in history, was deemed insufficient by PayPal's leadership, who believe the firm's long-term prospects warrant a higher price.
The news emerged late on Thursday, sending ripples through the fintech sector. PayPal's shares edged up 1.2% in after-hours trading in New York, reflecting investor relief that the board is holding out for a better deal. The bid valued PayPal at approximately $53 billion, a discount to its current market capitalisation of around $68 billion, according to data from Refinitiv. For context, PayPal's stock has fallen more than 60% from its 2021 peak, pressured by slowing growth and increased competition from Block and Apple Pay.
UK pension funds and retail investors with exposure to US equities through tracker funds or active managers will be watching closely. A deal at a higher price could boost returns for those holding PayPal shares indirectly, while a failed bid might renew downward pressure on the stock. The FTSE 100 was flat on Friday, but the wider technology sector has been volatile amid rising interest rates and regulatory scrutiny in both the US and Europe.
Analysts at Jefferies noted that the rejection signals PayPal's confidence in its turnaround strategy under new CEO Alex Chriss, who has been cutting costs and pushing into AI-powered payment tools. 'The board's stance suggests they see intrinsic value well above the offer price,' said a senior equity analyst at Peel Hunt, who asked not to be named. 'For UK investors, it underscores the importance of looking beyond short-term share price weakness in quality tech names.'
Stripe, a privately held payments unicorn valued at $65 billion in its last funding round, has been exploring acquisitions to expand its merchant services. Advent International, a Boston-based private equity giant, has a track record of large buyouts, including the £10 billion takeover of UK defence firm Cobham in 2020. Neither firm has commented on the reported approach.
The rejection comes as the UK's Payment Systems Regulator pushes for greater competition in the digital payments market, with new rules on open banking and card fees expected later this year. Any future deal involving PayPal could reshape the landscape for British businesses and consumers who rely on its services for cross-border e-commerce.