PayPal calls off iZettle IPO with $2.2 billion acquisition
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PayPal calls off iZettle IPO with $2.2 billion acquisition

After two weeks of “intensive discussions” between online payment provider PayPal and payments startup iZettle, the latter has called off its IPO. Why? Because it got a better offer: a $2.2 billion acquisition that iZettle’s CEO says will “superpower” the business’s expansion. That could be bad news for iZettle’s main competitor, too – Jack Dorsey led Square, which has recently been trying to charm European retailers away from iZettle.

PayPal’s share price has appreciated by 13% so far this year

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SOURCE: Yahoo Finance

iZettle is the company behind a “stylish, low cost” card reader that can be found in more than 500,000 small businesses across Europe. The company envisions a world where all businesses – no matter their size or where they are in the world – can accept card payments. The company’s CEO, Jacob de Geer, said: “iZettle’s background and mission are still very clear. We’re on a mission to help small businesses succeed in a world of giants.”

iZettle had been planning a $1.1 billion IPO prior to PayPal’s involvement, but the latter company was too big a partner to ignore. De Geer said: “Yes, we could succeed on our own, but PayPal turned out to have in the area of 20 million customers, while we have half a million; PayPal is present in 200 markets across the world, whereas we’re in 12. For me and my cofounder, the deal was a way to superpower iZettle, without taking the IPO track.”

All this is bad news for Square, which has struggled to break into Europe. De Geer is diplomatic – generous, even – when it comes to his rivals:

“Europe is extremely challenging, it’s not a one-size-fits-all like the U.S., and we understand the complexity and challenges of this market. Quite frankly we have great respect for Square as a company and were impressed with what they’ve achieved in the U.S., but I think it’s still too early to say how well or not they’re doing in the U.K. The market that we’re both addressing is so massive, so there’s plenty of room for more than one player.”

As PayPal completes its acquisition, it will be interesting to see whether or not they share Mr. de Geer’s sentiments.

Disclosure

Dominion holds PayPal in its Global Trends Ecommerce Fund.


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