Payment giant Paypal has announced that it is all set to acquire Stockholm-based Fintech startup iZettle for $2.2 billion. The deal will be an all-cash deal and is expected to be closed by third quarter of the current financial year.
As per the deal, the position of iZettle’s co-founder and CEO Jacob de Geer will remain intact. iZettle’s entire executive team will also continue the operation as before. However, all of them will be now reporting to Paypal’s COO Bill Ready.
Being the biggest ever acquisition for Paypal, the payment giant is obviously taking a huge bet by acquiring the Stockholm headquarter startup. Paypal expects this huge bet to pay off by giving it a formidable presence in the point-of-sales market and a better standing against strong competitors such as Square Inc and Stripe Inc.
Paypal’s acquisition of iZettle has also come at a time when the latter has already filed for an IPO in the Stockholm stock market for raising nearly $227 million. Close sources claim that the IPO filing forced Paypal management to speed up the acquisition process.
iZettle was founded in 2010 with an aim to offer plethora of affordable financial services like point-of-sales and partner application to small businesses. Over the years, the startup has emerged as a credible player in point-of-sales market with strong operational presence in Northern European and Latin American markets. Since Paypal currently does not have a strong offline presence in these markets, it will look to leverage on iZettle to penetrate into these markets. Besides, iZettle’s strong presence in U.K will also give Paypal a headstart in one of Europe’s highly lucrative market.
Paypal’s last big acquisition was in 2015 when it acquired money-transfer startup Xoom for nearly $890 million. As per the last earnings call, the financial payment giant has a strong cash reserve of $7.8 billion, giving it enough financial muscle for acquiring promising companies.