PayPal Holdings Inc on Thursday announced a deal to buy Swedish online commerce start-up iZettle for US$2.2 billion, a deal that came as the young company was poised for a stock market debut.
US-based PayPal, which was spun off from eBay Inc three years ago, said that its biggest acquisition to date would strengthen its platform for handling payment transactions at small businesses, particularly in Europe and Latin America.
“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,” PayPal chief executive officer Dan Schulman said in a statement. “In today’s digital world, consumers want to be able to buy when, where and how they want.”
The merging of iZettle and PayPal is a “strategic fit,” combining shared values and culture with complementary product offerings and geographies, Schulman said.
The iZettle platform for handling retail transactions is used by nearly 500,000 merchants, PayPal said.
The start-up has been compared to Square Inc, a payments platform cofounded by Twitter Inc chief executive officer Jack Dorsey that made it easy to take credit card payments using smartphones or tablets.
Buying iZettle would expand PayPal’s reach into shops in Brazil, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Spain and Sweden.
“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,” iZettle chief executive officer Jacob de Geer said in a statement.
The Stockholm-based start-up, which was founded in 2010, is expected to handle about US$6 billion in transactions this year, taking in gross revenue of about US$165 million in the process. The company said it expects to reach profitability by 2020.
After close of the acquisition, De Geer would remain in charge of iZettle, reporting to PayPal chief operating officer Bill Ready, the companies said.
Earlier this month, iZettle filed paperwork to go public with an offering of shares that valued the company at slightly more than US$1 billion.
PayPal closed the NASDAQ trading day in New York with a market value of about US$94 billion based on its share price, which rose a percent to US$80 in after-hours trades.
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