Private equity firm Advent and payment processor Stripe abandon over $50 billion acquisition of PayPal
According to Bloomberg, a consortium formed by private equity firm Advent and payment processor Stripe has halted its pursuit of acquiring PayPal Holdings, a deal that could have ranked among the largest leveraged buyouts in history.
The consortium had previously offered over $50 billion. Reuters provided more specific details in July: $60.50 per share, valuing the equity at over $53 billion, representing a premium of about 28% over the closing price at that time, along with approximately $50 billion in bank commitment financing; Stripe and Advent planned to hold equal shares rather than splitting the company. PayPal, Stripe, and Advent declined to comment on the latest reports. The board had previously deemed the initial offer insufficient and pointed out regulatory and financing obstacles, and after negotiations for a higher price, the deal still did not materialize.
The consortium itself has already narrowed its focus. Initially, Block was involved when contact was first made in April, but Block withdrew before making a formal offer, leaving Stripe and Advent to proceed equally. Stripe has been reported since February to be evaluating the purchase of all or part of PayPal's assets, when the stock price was near a recent low, with a market value of about $40 billion. Following the announcement of the offer and exceeding expectations in Q2 performance, PayPal's stock price has risen over 40% this quarter, bringing its market value back to about $52.6 billion; it closed at $61.47 on Thursday, above the written offer of $60.50, effectively closing the discount window needed for a leveraged buyout.
The buyer's strategic positioning is clear. Stripe's private valuation is about $159 billion, focusing on Venmo's U.S. peer-to-peer network, PayPal's brand checkout and wallet, cryptocurrency, and agency commerce entry, while hoping to reduce reliance on Visa and Mastercard. PayPal's side is led by CEO Enrique Lores, who took over in February, with advisors from Goldman Sachs and Evercore, evaluating options such as sale or spin-off. At the peak of the pandemic, PayPal's market value reached about $320 billion to $360 billion; currently, the forward P/E ratio is about 10.85 times, lower than the industry median of nearly 15 times. Around the same time, Stripe also acquired AI model gateway OpenRouter for over $7 billion to $8 billion, with insiders stating that the two transaction tracks are independent.
Mechanically, this is a repricing after the acquisition premium was extracted, not a sudden change in payment flow. The pre-market sellers were event-driven funds that wrote "to be privatized" into the valuation, while the buyers were absent, and the invalidation of the offer returned the shares to being priced based on operational fundamentals. Funds did not flow from the bank commitment into PayPal shareholders' accounts, making the $50 billion debt package harder to assemble as the stock price rises. Beneficiaries are Lores' team, which remains in the market to turn things around, and Stripe, which no longer bears the burden of giant LBO regulatory scrutiny, while the pressured party is the shareholders who chased high acquisition expectations this quarter. After the news was announced, the stock price fell by as much as about 16% in pre-market trading, and during the early session, it dropped about 12% to 14%, marking one of the largest single-day declines since February, eroding a significant portion of the approximately 30% gain since the offer was announced.
In supplementary remarks, insiders stated that if circumstances change, Advent and Stripe may still reconsider; currently, no company or regulatory agency has submitted public documents confirming the offer or its termination.
Source: Public information
ABAB AI Insight
Stripe's pursuit of PayPal did not start with the July offer, but rather from February when the stock price was driven down to a market value of about $40 billion. Patrick and John Collison are interested in the consumer network, not just another set of merchant APIs: Venmo, brand checkout, wallet, and agency commerce entry, to hedge Stripe's reliance on card organization clearing. Advent provides the debt engineering to leverage a public company into privatization. The $50 billion bank commitment can be calculated when the target market value is at the bottom; once the offer itself raises the stock price above the bid, the logic of collateral for the debt package reverses—it's harder for banks to commit to a giant LBO in an upward trend than in a downward trend.
The order of capital withdrawal also reflects risk preference. Block's early exit left a structure of equal holdings between the two remaining parties, indicating that no one wants to individually bear the regulatory and integration burdens. PayPal's board kicked the ball back with "insufficient offer plus financing and antitrust obstacles," while allowing Goldman Sachs and Evercore to continue exploring options for spin-offs or sales, effectively rejecting both discounted privatization and proactively selling itself in pieces. Lores, who was parachuted in from HP and replaced Alex Chriss in February, needs time to turn around the narrative and does not need to lock the company into a leveraged structure just as the stock price has rebounded by 40%. Meanwhile, Stripe has directed cash towards OpenRouter, shifting capital from "buying an old brand network" to "buying an AI traffic entry."
The analogy is not like Visa's halted acquisition of Plaid, which involved a data pipeline, but is closer to the valuation repair game after Dell's privatization: the buyer wants a discount plus leverage, while the seller wants a repricing in the public market. The payment industry is transitioning from "who has user accounts" to "who has checkout entry and agency layers." Apple Pay and Google Pay have already taken a portion of the front end, and PayPal's remaining assets are Venmo social payments and merchant brand buttons; these assets were cheap at $40 billion, but at over $53 billion, they must justify why they are worth one of the largest fintech LBOs in history.
Structural changes belong to the return of pricing power after the failure of capital concentration. A giant LBO must convert the future cash flows of the payment network into debt interest; with both regulatory and stock price gates closed, control remains with the public company board. The mechanism is: event premiums can only exist in windows where the offer is above the market value; once the window is closed by performance and rumors, the constraints of leveraged funds expire before the strategic story. The long-term integration of payment networks will not end with a single withdrawal of the bid, but the next offer must be higher than the already repriced market price, not lower.