Stripe and PayPal Linked in Early Deal Discussions

• Stripe explores potential PayPal acquisition as its valuation jumps to $159 billion.
• PayPal faces leadership change and rising competition from Apple Pay and Google Pay.
• Stablecoin growth and a new banking charter strengthen Stripe’s strategic expansion.

Stripe is reportedly evaluating an acquisition of its longtime rival, PayPal Holdings. The acquisition could involve acquiring all or specific parts of PayPal’s business, though neither company has publicly confirmed deal negotiations.

The reported talks emerged as Stripe disclosed a new valuation of $159 billion through a recent tender offer to shareholders and employees. That figure represents a 74% increase from the company’s valuation a year earlier. The tender offer is largely funded by investors, including a16z and Thrive Capital, with Stripe also committing some of its own capital to repurchase shares.

At $159 billion, Stripe’s valuation places it close to large publicly traded corporations such as Unilever, which trades around $163 billion, and Pfizer, valued at approximately $154 billion. The privately held payments firm is also just below Charles Schwab, which was recently trading near $169 billion.

Stripe enables businesses to accept payments, manage payouts, and automate financial operations. In its annual letter, founders John and Patrick Collison stated that the company’s programmable financial services now power more than 5 million businesses directly or through platforms.

They added that Stripe works with 90% of the Dow Jones Industrial Average companies and 80% of the Nasdaq 100, as well as many technology startups. The company reported a 34% year-over-year increase in business volumes.

In addition, Stripe’s annual letter highlighted the growth of stablecoin payments, which it said doubled last year to approximately $390 billion in total volume, citing McKinsey data. The company completed a $1.1 billion acquisition of Bridge last year and recently received a National Bank Trust Charter from the Office of the Comptroller of the Currency to expand its stablecoin-related services.

PayPal Faces Competitive and Leadership Pressures

The potential acquisition interest comes amid operational challenges and leadership changes at PayPal. The company has faced increasing competition from Apple Pay and Google Pay, which are integrated into consumer smartphones.

Stripe President John Collison told Bloomberg that PayPal has experienced a difficult period in recent years as the payments market changed, though he declined to comment on specific merger-and-acquisition scenarios.

PayPal is also undergoing a leadership transition. Enrique Lores is scheduled to take over as chief executive officer on March 1, following the departure of Alex Chriss. The change follows missed earnings estimates and slower payment volumes.

Related: Stripe Backed Tempo Opens Global Public Testnet For Stablecoin Payments