PayPal Board Views $53 Billion Stripe-Advent Bid as Undervalued, Cites Hurdles: Report

PayPal's (NASDAQ:PYPL) board of directors believes a $53 billion takeover proposal from rival Stripe and private equity firm Advent International undervalues the company, according to a Reuters report citing a person familiar with the matter.

Board's Assessment of the Offer

The unsolicited offer, valued at $60.50 per share, is reportedly being viewed skeptically by PayPal's board. The directors believe the price does not adequately reflect the company's long-term potential, particularly if its current management's turnaround strategy proves successful, Reuters said.

The board has not yet issued a formal response to the proposal. It is currently weighing the offer against its own strategic plan and is also considering the possibility that rival bids could emerge.

Financing and Regulatory Risks

Beyond the valuation, the board is reportedly assessing several other significant hurdles associated with the proposed deal. According to the source cited by Reuters, these concerns include:

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• The certainty of the financing for a transaction of this scale.
• Potential antitrust risks and regulatory scrutiny from a merger with a major competitor like Stripe.
• The potentially lengthy timeline required to complete such a complex acquisition.

Details of the Bid

The consortium has reportedly secured a financing package of approximately $50 billion from JPMorgan and Morgan Stanley, with Stripe and Advent contributing $17 billion in equity, Reuters reported, citing sources.

To proactively address potential regulatory roadblocks, the bidders have reportedly discussed potential remedies. These include the possibility of divesting PayPal's Braintree payment processing business if required by antitrust authorities.