PayPal Expands Global Omnichannel Platform With Acquisition of iZettle

PayPal Holdings, Inc. has announced that it has agreed to acquire iZettle, the leading small business commerce platform in Europe and Latin America, for $2.2 billion USD. The acquisition of iZettle significantly expands PayPal’s in-store presence, strengthening PayPal’s platform to help millions of small businesses around the world grow and thrive in an omnichannel retail environment.

“Small businesses are the engine of the global economy and we are continuing to expand our platform to help them compete and win online, in-store and via mobile,” said PayPal President and CEO Dan Schulman. “iZettle and PayPal are a strategic fit, with a shared mission, values and culture—and complementary product offerings and geographies. In today’s digital world, consumers want to be able to buy when, where and how they want. With nearly half a million merchants on their platform, Jacob de Geer and his team add best-in-class capabilities and talent that will expand PayPal’s market opportunity to be a global one-stop solution for omnichannel commerce.”

This combination brings together iZettle’s in-store expertise, recognized brand and digital marketing strength with PayPal’s global scale, mobile and online payments leadership, and trusted brand reputation.

Upon closing, PayPal gains in-store capabilities in the following 11 markets: Brazil, Denmark, Finland, France, Germany, Italy, Mexico, Netherlands, Norway, Spain and Sweden. PayPal also gains near-term in-store expansion opportunities into other existing PayPal markets, and acceleration of omnichannel commerce solutions in Australia, U.K. and U.S.

“Combining our assets and expertise with a global industry leader like PayPal allows us to deliver even more value to small businesses to help them succeed in a world of giants,” said iZettle CEO Jacob de Geer. “The combination of iZettle and PayPal will provide tremendous benefits to our merchants who will have access to an even wider range of tools to help them get paid, sell smarter and grow.”

iZettle expects to generate gross revenues of approximately $165 million USD in 2018, with approximately $6 billion USD of total payment volume (TPV) expected to be processed on its platform. The company has grown its revenues at a CAGR of approximately 60% from 2015 to 2017. iZettle expects to reach EBITDA profitability by 2020 on a standalone basis.

Once the acquisition closes, Jacob de Geer will continue to lead iZettle, which will operate as an integral part of PayPal’s merchant services offering, reporting to PayPal’s Chief Operating Officer Bill Ready. iZettle’s experienced management team, who have a demonstrated track record of scaling at pace, will continue running the business, ensuring continuity for customers, employees and partners. Upon closing, iZettle will become the European center of excellence for PayPal’s in-store product and services offerings.

The transaction is expected to be approximately $0.01 dilutive to PayPal’s previously communicated full year 2018 non-GAAP EPS. The transaction is expected to close in the third quarter of 2018. The completion of this transaction is subject to customary closing conditions, including regulatory approvals. The two companies will continue to operate independently until close.

A slide presentation with an overview of the transaction can be accessed through the company’s Investor Relations website at investor.paypal-corp.com. PayPal will host an Investor Day on May 24, 2018 in San Francisco, Calif. and management will provide additional details related to the transaction. A live webcast of the event will be available at investor.paypal-corp.com starting at 8:30 a.m. PDT.

Evercore is acting as sole financial adviser to PayPal, and Skadden, Arps, Slate, Meagher & Flom LLP and Roschier are acting as its legal advisers with regard to the transaction. J.P. Morgan Securities plc is acting as sole financial adviser to iZettle, while Gernandt & Danielsson is acting as its legal adviser.