PayPal Acquires Startup iZettle for $2.2 Billion

PayPal Holdings Inc. (NASDAQ: PYPL)announced on Thursday that it will acquire Swedish-based fintech startup iZettle for $2.2 billion, marking it as the company’s biggest acquisition. Shares were trading 2.1 percent higher after the opening bell on Friday.

PayPal already offers its services globally in over hundreds of countries. With the new acquisition, the company says it plans to expand its in-store presence while also strengthening its platform to help small businesses grow globally.

"iZettle and PayPal are a strategic fit, with a shared mission, values and culture—and complementary product offerings and geographies. In today's digital world, consumers want to be able to buy when, where and how they want. With nearly half a million merchants on their platform, Jacob de Geer and his team add best-in-class capabilities and talent that will expand PayPal's market opportunity to be a global one-stop solution for omnichannel commerce." said PayPal President and CEO Dan Schulman.

iZettle provides mobile card readers and other various digital payment solutions to small businesses. Many small privately owned businesses already use PayPal as a digital payment, but with iZettle, this allows PayPal to offer in-store payment services.

"The combination of iZettle and PayPal will provide tremendous benefits to our merchants who will have access to an even wider range of tools to help them get paid, sell smarter and grow." said said iZettle CEO Jacob de Geer.

Upon closing, PayPal will gain in-store capabilities in 11 markets from Brazil, Denmark, Finland, France, Germany, Italy and many other others across Europe. PayPal will also accelerate its in-store expansions in its own existing markets and bolstering commerce solutions in Australia, U.K. and the U.S.

iZettle expects to generate revenues of $165 million in 2018, while processing about $6 billion in payment volume. The company has grown its revenue at a CAGR of about 60 percent in the past few years.

The transaction is expected to close in the third quarter and be approximately 1 cents dilutive to PayPal’s previously full year 2018 non-GAAP EPS.

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