Oct. 25 (Reuters) – PayPal Inc (PYPL.O) said it is not pursuing the acquisition of Pinterest Inc (PINS.N) at this time, after multiple media reported last week that it was in talks to buy the digital bulletin board site for up to $ 45 billion.
The latest development, which shattered the prospect of Pinterest having access to PayPal’s massive user base, caused the social media platform’s share price to drop by more than 12%. Reuters and other media reported on negotiating the deal on Friday, when sources said PayPal offered $ 70 per share, mostly in stock, for Pinterest. Read more
PayPal did not provide further details on Monday in its one-line statement. The two companies did not respond to further requests for comment.
Tien-tsin Huang, payments analyst at JP Morgan, said a deal with Pinterest would pose “significant integration risk” for PayPal, especially in terms of culture and execution.
âRunning a platform primarily focused on user engagement and advertising would require PayPal to use muscles it is not used to,â Huang said in a research note to customers.
Pinterest grapples with the twin challenges of losing co-founder Evan Sharp and slowing user growth that has hampered its future prospects.
Some analysts now believe that Pinterest may attract the interest of other bidders in the future.
“We believe PINS is likely to still be seen as a potential target given its reasonable valuation relative to other social media peers and the steep decline in its shares in recent months, given a sharp deceleration in the growth of subscribers expected, “Angelo Zino, analyst at CFRA, said in a note Monday.
Helped by an increase in online e-commerce payments during the COVID-19 pandemic, PayPal shares had risen by more than 35% in the past 12 months, giving it a market cap of nearly $ 320 billion , ahead of reports on his talks with Pinterest.
Since then, PayPal shares have lost 12% of their value, with pundits and analysts blaming investors’ poor reception for the collapse of the talks, while others have pointed to the challenges of integrating Pinterest into the within PayPal.
Shares of PayPal rose 3.6% following the company’s statement on Sunday night. Shares of Pinterest, which had jumped 13% after the release of talks last week, gave up almost all of their recent gains and fell about 12% to $ 51.1 per share.
PINTEREST AT THE CARREFOUR
Sharp founded the online scrapbooking and photo sharing platform in 2010 with Ben Silbermann, who is the CEO of the company, and Paul Sciarra, who left in 2012.
Earlier in October, Sharp announced he would be stepping down as Creative Director to join LoveFrom, a company run by Jony Ive, the designer of many Apple Inc products (AAPL.O). Read more
As blocks have eased globally, Pinterest has warned of slowing user growth, especially in the United States, which makes up the majority of its user base. Pinterest said it expects growth primarily through deeper engagement with existing users, rather than new signups.
In the June quarter, Pinterest’s total monthly active users (MAU), a widely watched metric, rose only 9% to 454 million, after jumping 30% in the previous quarter.
The Pinterest deal was reportedly the biggest acquisition of a social media company at the advertised price and one of the biggest tech deals in history, far surpassing Microsoft Corp’s purchase of LinkedIn (MSFT.O) for $ 26.2 billion in 2016.
It would also have allowed PayPal to capture more of the growth of e-commerce as more and more buyers buy more and more items they see on social media, often following “influencers” on platforms such as than Instagram, TikTok and even Pinterest.
PayPal, among the big winners in the pandemic, recently embarked on a wave of acquisitions, having bought out Japanese company Buy-now-pay-tard (BNPL) Paidy for $ 2.7 billion earlier this year. .
It also acquired Happy Returns, a company that helps online shoppers return unwanted merchandise, for an undisclosed amount in May to bolster its e-commerce offerings and build on its $ 4 billion acquisition. from Honey Science online coupon finder in 2019.
Additional reporting by Juby Babu, Niket Nishant, Shubham Kalia and Sachin Ravikumar in Bengaluru; Written by Anirban Sen; Editing by Anil D’Silva and Edward Tobin
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