Advent, Stripe consortium is said to drop pursuit of PayPal

PayPal has faced challenges in modernizing its payment technologies as competitors like Apple and Alphabet have gained market share, according to people familiar with the situation. A consortium led by buyout firm Advent and payment processor Stripe has decided to withdraw from their pursuit of fintech giant PayPal, which would have been one of the largest leveraged buyouts ever, according to individuals with knowledge of the matter.

The group had previously offered over US$50 billion for the company. Founded in the late 1990s, PayPal has been an early entrant in digital payments but has struggled to keep up with technology advancements. The takeover interest, along with strong second-quarter earnings that exceeded analyst expectations, has helped PayPal recover.

The company's shares have surged more than 40% this quarter, giving it a market value of around US$52.6 billion. In March, PayPal replaced its former CEO Alex Chriss with Enrique Lores. Lores aims to set specific financial targets for PayPal, alter the way the company reports earnings, and assign revenue goals to each business unit to provide clearer insights for investors.

Bloomberg News first reported in February that Stripe was considering acquiring a portion or all of PayPal following a drop in its stock price. Both PayPal and the consortium can potentially re-enter the negotiations at a later time if circumstances change. The companies have not commented on the situation.