PayPal Holdings Inc. shares tumbled around 15% in premarket trading on Friday, August 28, following reports that buyout firm Advent International and payment gateway Stripe have abandoned their pursuit of the fintech giant.
As reported by Bloomberg, the consortium is no longer pursuing a deal for PayPal, ending what would have ranked as one of the largest leveraged buyouts in history. The group had earlier made a bid worth over $50 billion for the firm, starting with an offer in July for PayPal worth $60.50 per share.
This now-dead deal would see Stripe join forces with PayPal to form a payments firm handling transactions valued at roughly $3.7 trillion per year, due to the support of $50 billion in bank financing committed to the deal by Advent and Stripe, who sought joint ownership of PayPal.
Shares of PayPal increased more than 42% this quarter on investor optimism that a takeover would materialize, with several Wall Street analysts raising concerns over their price targets. But following the breakdown of talks, the situation remains fluid as Advent and Stripe can potentially return later with a revised offer.
In earlier reports, it had been noted that PayPal considered the offer inadequate and that the two parties were discussing further improvements to the deal before negotiations ultimately collapsed. This is a major blow to the investors of PayPal, who had high expectations of an acquisition premium.