PayPal set to buy Pinterest for $45 bln deal

There are rumors that PayPal Holdings Inc (PYPL.O) has proposed to purchase Pinterest Inc (PINS.N) for $45 billion, which might lead to additional financial technology and social media tie-ups in e-commerce in the near future.

More than $26.2 billion was paid by Microsoft in 2016 for LinkedIn (MSFT.O), making it the most expensive social media deal ever.

While online customers are increasingly buying products they see on social media sites such as Instagram and TikTok, the deal negotiations are occurring at a time when many of these buyers follow “influencers.” PayPal would be able to capture more of the e-commerce boom if it bought Pinterest, as advertising revenue would allow it to do so.

According to one of the sources, PayPal has made an offer to buy Pinterest for $70 per share, primarily in stock. According to the source, the online payments company is hoping to reach an agreement by the time it releases its quarterly results report on November 8th.

According to the sources, no agreement was guaranteed and terms may alter. They requested to remain anonymous due to the sensitivity of the situation.

Requests for feedback from PayPal and Pinterest went unanswered. The negotiations between the firms were originally reported by Bloomberg News on Wednesday.

PayPal’s stock price dropped by 4.9% to $258.36, while Pinterest’s stock price soared by 12.8% to $62.68.

In a report, Wedbush analysts stated, “(The) combination would be a substantial boost for PayPal’s continuing monetization ambitions on both sides of its merchant and customer platforms.”

When the COVID-19 epidemic hit, more individuals utilized PayPal to do their shopping and pay their bills online rather than going out. Its stock price has grown by roughly 36% in the last year, valuing the company at close to $320 billion.

When Pinterest went public in 2019, its market value was around $13 billion. The number of people seeking crafts and DIY project ideas also increased significantly, since lockdown barriers kept many at home all day.

Pinterest has issued a declining user growth warning as lockdowns have been lifted, particularly in the United States, the company’s largest market. Rather than signing up new users, it expects revenue growth mostly from stronger interaction with existing customers.

Market valuation measures from Refinitiv Eikon show that Pinterest shares are now priced at a discount to those of some of the younger social media platforms like Snap Inc (SNAP.N) but at a premium to more established firms like Twitter Inc (TWTR.N).

It is worth 62 times the social media company’s profits before interest, taxes, depreciation, and amortization over the previous 12 months according to Eikon when compared to PayPal’s offer of 26 percent.

When it bought LinkedIn for all-cash, Microsoft paid 79 times the company’s earnings according to that statistic. But Pinterest will give PayPal equity to its shareholders as a wager that this currency would increase over time as the merged business reaps income and synergies, Pinterest said on Monday.

Following Evan Sharp’s announcement last week that he will step down as Pinterest’s chief creative officer to join LoveFrom, the company founded by Jony Ive, the creator of many Apple Inc. (AAPL.O) devices, the company is at a crossroads.

Ben Silbermann, the CEO of the San Francisco-based firm, and Paul Sciarra, who departed in 2012, developed Sharp’s online scrapbooking and photo-sharing platform in 2010. read on for more information

In recent years, PayPal has sought to expand its e-commerce operations by way of acquisitions. It paid $4 billion in 2019 for online coupon finder Honey Science and $2.7 billion in early this year for Japanese buy-now-pay-later (BNPL) business Paidy. Earlier this year, it purchased the return-service company Happy Returns.