PayPal Is Said to Be in Talks to Buy Pinterest in a $45 Billion Deal
If completed, it would be the largest consumer internet deal of the past decade.,
Digital payments and online shopping go hand in hand. Now PayPal is trying to unite one with the other.
The Silicon Valley digital payments giant has offered to buy Pinterest, the digital pinboard company that enables e-commerce within its app, in a deal valued at about $45 billion, according to people with knowledge of the discussions. PayPal has offered around $70 a share for Pinterest, the people said, a 25 percent increase from Pinterest’s opening share price on Wednesday.
If completed, the deal would be the largest in the consumer internet industry over the past decade, topping Microsoft’s $26 billion purchase of LinkedIn in 2016 and Salesforce’s $27.7 billion acquisition of Slack last year, according to the data service firm Dealogic. It would also be among the largest deals for PayPal, which was spun off from eBay in 2015 and has snapped up payments companies globally.
Buying Pinterest would underline PayPal’s interest in moving further into e-commerce. In 2019, PayPal agreed to pay $4 billion for the coupon payment platform Honey, which shows people discounts while they shop online. Through Pinterest’s app, people can save images to digital pinboards and buy goods directly through what are known as “buyable pins.”
PayPal did not respond to a request for comment, and a Pinterest spokeswoman declined to comment. Pinterest’s share price surged 13 percent on Wednesday after reports of the deal, bringing the company’s valuation to $40 billion. PayPal’s shares fell nearly 5 percent; the company has a market capitalization of $303 billion. The talks were reported earlier by Bloomberg.
Until recently, PayPal largely bought companies that directly tied into digital payments services, which people use to pay for goods and services online without needing a credit card.
But last month, Dan Schulman, PayPal’s chief executive, told Wall Street analysts that he envisioned the company’s becoming a “super app” that folds in numerous services and functions, like some apps in Asia. Mr. Schulman outlined a “huge road map” for tools related to shopping, including “universal shopping carts.” Future acquisitions, he said, may surprise people.
“Sometimes we buy things that people don’t expect, like Honey, and people question it,” he said. “It means that we’re thinking about things and where things are going and not just where they are today.”
Acquiring Pinterest would be a bold move in that direction, even though the San Francisco-based company largely makes money by selling ads rather than through e-commerce.
Pinterest was founded in 2009 by the entrepreneurs Ben Silbermann, Evan Sharp and Paul Sciarra. It caught on quickly, with people flocking to it to “pin” images on home decor, weddings, travel destinations and many other topics. The company has said it has about 454 million users.
Pinterest went public in 2019, and over the last year its share price has risen 26 percent. Revenue increased nearly 50 percent in 2020 to $1.7 billion as the company’s user growth rose, fueled by people spending more time online in the pandemic.
Emily Anderson, a managing director at Union Square Advisors, an advisory firm not involved in the talks, said a deal with Pinterest could allow PayPal to gain more customers and lock them in, without having to lure them with advertising or partnerships.
“The concept is really owning an audience versus renting,” she said.
But Andrew Jeffrey, an analyst with Truist Financial, called the potential deal “an act of near desperation” that made “zero sense.” He said PayPal was struggling amid increased competition in its core business of facilitating digital payments.
Stripe, a start-up that offers payment services to businesses, has gained ground in recent years, reaching a private valuation of $95 billion. Square, a digital payments company led by Jack Dorsey, who is also Twitter’s chief executive, has also grown over the past two years as the pandemic helped propel a shift away from using cash.
PayPal and Square are both flush with capital and eager to make bold deals. This year, Square bought Tidal, the music streaming service, for nearly $300 million and Afterpay, a company offering installment payment services for online shoppers, for $29 billion. PayPal recently acquired Paidy, a Japanese provider of installment payment services, and iZettle, a Swedish payment processor.
While Pinterest’s business has also boomed in the pandemic, the company has faced a bruising year culturally. The company, whose customers are mostly women, has repeatedly grappled with lawsuits and allegations that it mistreated its female employees.
Last year, two Pinterest employees spoke out about sexism and racism they experienced at the company. Also, Pinterest’s top female executive sued for discrimination and retaliation, leading to a $22.5 million settlement. Outrage over those stories prompted several hundred Pinterest workers to stage a virtual walkout last year.
This year, a woman who said she had created Pinterest along with its founders sued the company, accusing it of breach of implied contract. Pinterest said the claims were without merit.