- PayPal's (PYPL +2.1%)agreement to buy Sweden's iZettle solves some challenges for both the buyer and the seller, according to a Bloomberg opinion piece.
- The $2.2B deal gives PayPal some traction in in-store payments, an area it's had trouble breaking into. It also gives PayPal a firm footing in some regions where competitor Square (NYSE:SQ) has little presence.
- For unprofitable iZettle, it eliminates the uncertainty of a planned IPO, which was seeking a value of more than 10B Swedish kronor ($1.1B), more than 10 times its revenue of 776M kronor. Square, which has a profit, trades at less than 10 times net revenue.
- While expensive, the acquisition is far cheaper than buying Square, an oft-speculated scenario, Alex Webb writes.
- PayPal can afford the $2.2B price tag--it gets $6.8B from the sale of loans and receivables to Synchrony Financial (NYSE:SYF) later this year and has a market capitalization of more than $90B and net debt 10% below annual EBITDA.
- Previously: PayPal confirms it's buying iZettle for $2.2B cash: TechCrunch (May 17)