PayPal is placing a huge bet on point-of-sale transactions, markets outside the United States and small businesses as it attempts to grab a bigger foothold against Stripe, Square and other payments companies.
PayPal confirmed on Thursday it would acquire iZettle, the payments provider based in Stockholm and commonly called the Square of Europe, at a price of $2.2 billion that will be all cash.
The acquisition is expected to be completed during the third quarter of 2018 and will see the CEO and co-founder of iZettle Jacob de Geer remain and lead iZettle. He will be reporting directly to the COO at PayPal Bill Ready.
Others on the executive team of iZettle will remain to help operate the business, which is to become an important part of offline and in-store payments in Europe, said PayPal.
The deal’s time is notable as it comes just after the iZettle filed for an initial public offering earlier in May only nine days ago to be exact, in its bid to scale it business.
The payments company was planning to raise as much as $227 million on Stockholm’s Nasdaq, which would have given it a value of more than $1.1 billion.
One analyst in the industry said that the IPO filing gave the acquisition talks a whole new form of urgency. The news of the acquisition was supposed to be announced on Friday, but following several rumors that leaked out on Thursday, the company decided to confirm its acquisition.
PayPal has a $94 billion market cap and its most recent earnings report said it was holding over $7.8 billion in cash, its equivalents and investments, which gives it more than sufficient funds to make the deal.
iZettle is the biggest-ever PayPal transaction. In 2015, the company acquired Xoom a startup that specializes in money-transfers for $890 million. In 2013, when part of eBay, it bought Braintree for $800 that included Venmo.
iZettle operates in 12 markets, including Mexico, Latin America and several in northern Europe, in areas PayPal is not extensive with its offline presence such as in Brazil, Denmark, France Finland, Germany Mexico, Italy, Norway, Spain, Sweden and the Netherlands.
Its expansion in Latin America was made through the investment from Santander a Spanish bank.
iZettle has great strength in the UK therefore, that will help PayPal to strengthen its business there as Square has emerged as the big competitor there.