25 July 2014

EBay agrees $800m Braintree acquisition

26 September 2013  |  8614 views  |  1 braintree/paypal

PayPal parent eBay has confirmed that it has agreed an $800 million cash deal to buy Chicago-based payments start-up Braintree.

Founded in 2007, Braintree enables online and mobile businesses to accept card payments. The firm processes more than $12 billion in payments annually for over 4000 merchants, including Github, Shopify and Angry Birds creator Rovio.

Once the acquisition closes - expected in the fourth quarter - Braintree will operate as a separate service within PayPal and continue to be led by CEO Bill Ready. The rest of the start-up's management and employees are also expected to stay on.

Importantly for PayPal, the acquisition gives it access to Venmo, the mobile commerce outfit Braintree acquired last year for $26.2 million. Venmo stores users' card details so that they can pay with a single click for in-app purchases at partner merchants.

"Bill Ready and his team add complementary talent and technology that we believe will help accelerate PayPal's global leadership in mobile payments," says eBay CEO John Donahoe.

Comments: (1)

Mike McCormack - PALMA ADVISORS LLC - Fort Lauderdale | 26 September, 2013, 20:24

Another typo in the first paragraph of this article too. Is anyone proofreading your material?

"The firm processes more than $12 billion in payments annually for over 4000 merchants $4 billion"....  What?

Leaving all that aside, the potential multiples on this deal and the all cash structure suggest Braintree scored BIG.

Assuming a net gross margin of 80 bp (on $12 Billion sales), the $800 million cash purchase works out as an 8.3 net-margin multiple.  The EBITDA multiple seems as if it could be 25-30x.

It's interesting that mainline bank and third party acquirers seemed to never get into the bidding, which is a real big mistake.  Most of the traditional acquirers are puttering along making use of archaic costly processing and accounting systems, making tiny tid-bit innovations around the permitters of their systems and services that have little meaningful effect on their market positions or long-term viability.

 

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Related blogs

Create a blog about this story (membership required)

Related stories

25 September, 2013
23 September, 2013
10 September, 2013
06 September, 2013
14 August, 2013
08 August, 2013
10 July, 2013
27 June, 2013
12 April, 2013
17 October, 2012

Related company news

 
Find out more

Featured job

to $120k base, $250k OTE, full benefits
Boston, MA (USA)

Find your next job