Oct. 21, 2021, 9:32 a.m.
PayPal Holdings Inc offered to buy digital signage site Pinterest Inc for $ 45 billion, people familiar with the matter said on Wednesday, a combination that could herald more links between fintech and social media companies in e-commerce.
Talks for the deal come as internet shoppers increasingly buy items they see on social media, often following “influencers” on platforms such as Instagram and TikTok. Buying Pinterest would allow PayPal to capture more of this e-commerce growth and diversify its revenue through ad revenue.
PayPal offered $ 70 per share, mostly in stock, for Pinterest, one of the sources said. The online payments provider hopes to successfully negotiate and announce a deal when it releases its quarterly results on November 8, the source added.
The sources warned that no deal was certain and that conditions could change. They asked not to be identified because the matter is confidential, reports Reuters.
PayPal and Pinterest did not respond to requests for comment. Bloomberg News first reported on the PayPal-Pinterest talks on Wednesday.
PayPal’s offer represents a 26% premium over Pinterest’s closing price of $ 55.58 on Tuesday. Shares of PayPal fell more than 4% on the news, while Pinterest rose more than 14% to $ 63.51.
“(The) combination would be a significant asset to PayPal’s ongoing monetization initiatives on both sides of its merchant and consumer platforms, particularly if Pinterest’s social commerce platform is integrated with Honey’s AI in the PayPal’s destination application, ”Wedbush analysts wrote in a note.
The payments giant has been among the big winners from the COVID-19 pandemic, as more people have used its services to shop online and pay bills to avoid going out. Its shares have risen about 36% in the past 12 months, giving it a market cap of almost $ 320 billion.
Pinterest also saw a huge spike in users looking for craft and DIY project ideas, as lockdown restrictions kept people at home.
As lockdowns eased, Pinterest warned of slowing user growth, especially in the United States, its largest market.
Pinterest was valued at around $ 13 billion when it went public in 2019.
The company is at a crossroads after co-founder Evan Sharp announced last week that he would be stepping down as chief creative officer to join LoveFrom, a company run by Jony Ive, the designer of many Apple Inc. some products.
Sharp founded the online photo and album sharing platform with Ben Silbermann, who is the CEO of the San Francisco, California-based company, and Paul Sciarra, who left in 2012.
PayPal has been looking to strengthen its e-commerce offerings through acquisitions in recent years. He bought online coupon researcher Honey Science in 2019 for $ 4 billion and Japanese company BNPL (buy now-pay-tard) Paidy for $ 2.7 billion earlier this year. It acquired return service provider Happy Returns in May.
SOCIAL MEDIA-BASED COMMERCE
Social media platforms that haven’t researched mergers with fintech companies have looked for ways to allow consumers to buy directly from their platforms.
TikTok, for example, is testing a way for users to purchase products directly from its short video app. It teamed up with e-commerce giant Shopify and in August began allowing retail brands to link their product catalogs to the app.
Analysts said the PayPal-Pinterest deal talks highlight the potential for other social media and fintech companies to join forces to capture swathes of the e-commerce market.
“Social / interactive commerce is growing in the US and no one has won it yet. So rather than going against Amazon, PayPal is betting on a different kind of buying model, ”said Joe Kaziukėnas, Marketplace Pulse ecommerce analyst.