PayPal balks at Stripe acquisition offer

• Key insight: PayPal's board of directors is reportedly unimpressed with Stripe and Advent International's $53 billion offer to buy the company. 
• What's at stake: Analysts had speculated that the offer may be low, despite the fact that it came in at a 30% premium compared with other merchant processors. 
• Forward look: In addition to providing Stripe with inroads to expand enterprise payments and infrastructure for agentic payments, a PayPal acquisition would also help the company scale its consumer offering through Venmo and create an alternative network.  

Stripe has a lot to gain from a PayPal acquisition — if the price is right. 

PayPal's board of directors is reportedly unimpressed with Stripe and Advent International's $53 billion acquisition offer, according to Reuters, which reported the two companies' initial interest in purchasing the embattled online payment platform. Analysts had speculated that the offer may be low, despite the fact that it came in at a 30% premium compared with other merchant processors. Stripe has reportedly been interested in acquiring PayPal since as early as February. 

A Stripe spokesperson told American Banker in an email that the company does not comment on rumors and speculation. PayPal declined to comment. Advent did not return a request for comment by publication time. 

"While we expected [second-half] M&A to pick up, a PayPal megadeal wasn't on our list," Keybanc analysts said Wednesday. 

Stripe has a lot to gain by acquiring PayPal. For one, it would nearly double payment volume to $3.7 trillion. It would also provide Stripe with a Luxembourg bank license, help the company expand its international reach and scale in consumer payments, according to Keybanc. That's in addition to providing Stripe with inroads to expand enterprise payments and infrastructure for agentic payments.

Bringing Venmo into its orbit would also provide Stripe with an alternative network solution, according to Tony DeSanctis, a senior director at Cornerstone Advisors. 

"If [Stripe] can leverage Venmo and PayPal and bring that consumer base to Stripe merchants without having Visa and Mastercard, there's economic value to that that is probably not being fully considered," DeSanctis told American Banker. 

"That's the secret sauce. There's already merchants who accept Venmo," he said. "Bring the entire Stripe merchant network into the Venmo ecosystem at a lower interchange for the merchant, which makes it appealing to them, and a pretty robust customer base."

It would be a model similar to what Block is trying to create between Cash App and Square merchants. 

"It creates yet another alternative to bypass Visa, Mastercard networks, especially if you start thinking about layering in stablecoin," DeSanctis said. 

And a Stripe-PayPal combination could create a "meaningful stablecoin player," according to Mizuho analyst Dan Dolev. 

Any potential deal faces other hurdles in addition to appeasing PayPal's board of directors on price. Any makeover of PayPal by Stripe could prove to be more costly, Dolev said, because PayPal's fundamentals are weakening. Elon Musk's X-Money could also disrupt Venmo with its high deposit yield and "global ubiquity."  

Keybanc analysts expect any acquisition negotiations between the two companies to be a protracted process. Any deal would also likely face meaningful resistance from regulators abroad.