PayPal agrees $2.2 billion deal for iZettle

PayPal agrees $2.2 billion deal for iZettle

PayPal has reached an agreement to acquire Stockholm-based iZettle in an all-cash deal valued at $2.2 billion, it's biggest ever transaction in a dynamic and fluctuating payments environment.

The timing of the agreement comes just weeks after iZettle announced plans to float on Nasdaq Stockholm in a bid to raise $227 million at a valuation of $1.1 billion.

Jacob de Geer, CEO and co-founder at iZettle explains the change in direction: "Late in the IPO process, PayPal got in touch and showed a serious interest in iZettle. The relationship with PayPal is not a new one, in fact we’ve talked about different ways of working together for years. But this time it very quickly turned into a detailed discussion on how we could benefit from joining forces. And we both realised the great opportunity in doing just that."

The combination brings together iZettle’s in-store experience, digital marketing strength and mobile point-of-sale technology with PayPal’s global scale, brand reputation and online and mobile payments expertise.

For PayPal, the deal delivers a ready-made competitor to Square with a franchise across 12 markets in Europe and Latin America and a small merchant base of a half-a-million clients.

"Small businesses are the engine of the global economy and they are increasingly demanding a partner that can provide a one-stop solution to help them compete and win online, in-store and via mobile," says Dan Schulman, president and CEO of PayPal. "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."

The deal is expected to close in the third quarter. Jacob de Geer will continue to lead iZettle from its Stockholm base, reporting to PayPal COO Bill Ready.

Comments: (6)

A Finextra member
A Finextra member 18 May, 2018, 11:44Be the first to give this comment the thumbs up 0 likes

Another competitor bites the dust. How is real competition expected to thrive when the big fish keep swallowing the little ones? 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 May, 2018, 19:263 likes 3 likes

Good question but, as long as the small fish is VC-funded, its raison d'être is to get swallowed by the big fish. As I highlighted in a slightly different but still relevant context elsewhere on Finextra, consumers are naive if they expect the fintech movement to make any difference in traditional FI's behavior.

A Finextra member
A Finextra member 21 May, 2018, 07:02Be the first to give this comment the thumbs up 0 likes Right so Ketharaman! Here in the EU the polititicians and the central bank have strived to limit the US large card schemes companies dominance on payments and worked to open ip for more competition in the bank sector through the PSD2 and by embracing fintech startup companies and the concept of open banking. But as you say a VC company objective is to be sold to the highest bidder, often a global incumbent. So the end game will be more concentration to large multinational players controlled from outside of Europe.
James Piggot
James Piggot - Finastra - London 21 May, 2018, 08:14Be the first to give this comment the thumbs up 0 likes

That is a heck of lot of dollars to pay for a small fish that has a "small merchant base of half a million clients" which are all little fish themselves.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 21 May, 2018, 10:48Be the first to give this comment the thumbs up 0 likes

@FinextraMember: From time to time, we hear many pundits calling Europe a digital colony of USA. In the aftermath of Walmart's acquisition of Flipkart in India, they've been giving their unsolicited advice on how India can / should avoid becoming another US digital colony. Time will tell whether OB / PSD2 will be able to reverse the trend in Europe.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 21 May, 2018, 10:51Be the first to give this comment the thumbs up 0 likes

@James Piggot

Joseph Heller wrote decades ago in his bestseller Picture This, “‘Aristotle Contemplating The Bust of Homer’ is the most valuable painting because it’s the most costly painting; it’s the most costly painting because it’s the most valuable painting”. He was referring to the Rembrandt masterpiece that was the first painting in the world to sell for more than a million dollars.

Bottomline is, valuation is entirely between buyer and seller. As long as somebody is willing to buy shares of a startup at a certain valuation, it’s immaterial what third parties think about the valuation. That said, they say, valuation is always based on future expectations undergirded by past performance and not past performance itself. Also, 0.5M merchants is not small.