PayPal is buying payments start-up iZettle for $2.2 billion ahead of IPO

PayPal is buying payments start-up iZettle for $2.2 billion ahead of IPO

PayPal is buying payments start-up iZettle for $2.2 billion ahead of IPO

PayPal said it hopes to be able to reap the advantages of the merger nearly immediately in certain areas, and that the financial benefits will kick in shortly after the deal closes, expected in the third quarter.

The company sells card readers that connect to smartphones or tablets, helping small companies to avoid some of the prohibitive costs associated with taking card payments.

"This is the largest acquisition in our company's history and significantly expands our in-store presence around the world, strengthening our platform to help millions of small businesses around the world grow and thrive in an omnichannel retail environment". PayPal closed the Nasdaq trading day in NY with a market value of about $94 billion based on its share price, which rose a percent to $80 in after-hours trades.

While PayPal predominates as an alternative payment mechanism for websites and other online merchants, it lacks the kind of hardware and infrastructure to enable small business owners to take card payments via mobile technology. The $2.2 billion price tag will certainly make this one of the biggest European deals, though PayPal has still not detailed how much of that figure is cash or stock, or whether it includes assumptions of iZettle's existing debts.

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In addition, the deal will help PayPal to offer a better suite of services to its customers.

PayPal is typically strong in the online arena, particularly on eBay (which used to own the company), and the deal with iZettle will strengthen its presence in bricks-and-mortar establishments, particularly in Europe. This year, it'll generate $165 million in 2018, and process some $6 billion worth of payments. This is not the first time PayPal acquires startups with brilliant tech, but in this case, iZettle would have become a potential rival, had it raised enough funds via IPO. The completion of this transaction is subject to customary closing conditions, including regulatory approvals.

JPMorgan Chase & Co. was sole financial adviser to iZettle, while PayPal worked with Evercore Inc.

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