PayPal Continues to Scout for Potential Takeover Targets
23 December 2019 - 9:59PM
Dow Jones News
By Nina Trentmann
PayPal Holdings Inc. will continue to pursue potential takeover
targets in 2020 amid robust deal activity in the payments
sector.
"There's a lot of opportunities to acquire companies
inorganically," Chief Financial Officer John Rainey said in an
interview.
PayPal on Thursday completed the acquisition of a 70% stake in
Chinese payment platform Guofubao Information Technology Co., also
known as GoPay. In November, PayPal struck a deal to buy Los
Angeles-based shopping and rewards platform Honey Science Corp. for
about $4 billion.
PayPal over the past two years has pursued an acquisition
strategy that involved annual transactions in the range of $1
billion to $3 billion and has spent more than $7 billion on targets
since then, Mr. Rainey said. He said the company would continue to
look within that existing range.
PayPal needs to make sure it continues to find the right
targets, said Moshe Katri, an equity research analyst for financial
services firm Wedbush Securities Inc. "There's a long list of
privately held companies in this space," he said. "The challenge is
to find the right fit."
Valuations in the payments sector have gone up in the past two
years, according to analysts.
Deals in the sector of late include Fidelity National
Information Services Inc., which this year paid about $35 billion
for Worldpay Inc., a payment technology firm, and Global Payments,
which spent $21.5 billion for its peer Total System Services
Inc.
PayPal in 2018 paid about $2.2 billion for Swedish
financial-technology startup iZettle AB.
Despite its sizable budget for acquisitions, PayPal needs to be
selective when looking for targets, Mr. Katri said.
"We are very mindful of that," Mr. Rainey said. "For every
transaction that we do, there are dozens that we turn away."
Write to Nina Trentmann at Nina.Trentmann@wsj.com
(END) Dow Jones Newswires
December 23, 2019 05:44 ET (10:44 GMT)
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