PayPal buys payments startup iZettle for $2.2 bn

Isaac Cain
May 18, 2018

Online payments pioneer PayPal Holdings Inc (NASDAQ:PYPL) is to buy Stockholm-based point-of-sale payments provider iZettle for US$2.2bn. US-based PayPal, a unit of eBay, said that its biggest acquisition to date would strengthen its platform for handling payment transactions at small businesses, particularly in Europe and Latin America.

IZettle sells card readers that connect to smartphones or tablets, helping small companies to avoid some of the prohibitive costs associated with taking card payments.

By joining forces with PayPal, which operates in 200 countries, iZettle will be able to accelerate its global expansion, including to the USA, the companies said.

IZettle expects to generate gross revenues of approximately $165 million Dollars in 2018, with approximately $6 billion USD of total payment volume (TPV) expected to be processed on its platform.

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PayPal said it hopes to be able to reap the advantages of the merger nearly immediately in certain areas, and that the financial benefits will kick in shortly after the deal closes, expected in the third quarter.

Dan announced that it is the largest acquisition in PayPal's history and that it will significantly expand the company's "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".

PayPal could well be set to move further into high-street shopping after acquiring iZettle for $2.2bn.

The takeover comes less than three weeks after iZettle said it would list shares in Stockholm. Upon closing, iZettle will become the European center of excellence for PayPal's in-store product and services offerings. The company has grown its revenues at a CAGR of approximately 60% from 2015 to 2017. iZettle expects to reach EBITDA profitability by 2020 on a standalone basis. The deal will be an all-cash deal and is expected to be closed by third quarter of the current financial year. "But this is a very exciting way for the company to continue its vision".

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