PayPal keeps half of the takeover premium after Stripe and Advent walk away
The $60.50 offer is gone, PayPal closed at $53.66, and roughly half the premium the bid created is still in the price, leaving a $1.5 billion cost programme to justify what the market has not yet given back.
The Investor · Invest desk
What happened
- Bloomberg, citing people familiar, reported that Advent and Stripe have abandoned their pursuit of PayPal, a bid pitched at $60.50 a share and valuing the company at about $53 billion.
- PayPal's directors had judged the offer too low and the board declined to send a formal response, and it was during that standoff that the two suitors withdrew.
- The stock fell 12.71 per cent on Friday to close at $53.66, having been down as much as 16 per cent before the open from Thursday's $61.47 close.
- Mizuho cut its target to $51 from $60 and stayed neutral, and Loop Capital cut to $50 from $62 while keeping a hold, both landing below Friday's close.
Why it matters
- What it limits constraint With no live bid to arbitrage, the equity depends on Lores banking $1.5 billion of savings and a 20 per cent headcount cut, a lever that works on expenses rather than on what PayPal can charge merchants.
- Who has to decide decision Stripe's next $8 billion is committed to an AI model marketplace rather than to merchant and wallet consolidation, so the one buyer able to argue a strategic premium has already spent the money elsewhere.
- What doesn't add up contradiction Burry's $75 to $115 intrinsic range sits against sell-side targets of $50 and $51, which means the same asset is being marked at nearly double Friday's close or slightly under it depending on whose model you take.
- Who's exposed exposure Sixteen hedge funds left in the second quarter while the dollars held barely moved, leaving a smaller and more concentrated holder base to absorb selling from anyone who owned this only for the deal.
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Start with the $6.29 still in the price. The offer put $13.13 a share of premium into PayPal, being $60.50 against the $47.37 close before the bid was reported [2][6][28], and Friday's $53.66 gave back $6.84 of that, which leaves just under half the dead deal's premium sitting there [4][29]. Thursday is the more interesting number: at $61.47 the stock traded 97 cents above the bid [5][30], so the marginal buyer was not paying for the offer on the table but for the higher one the Wall Street Journal reported was being negotiated [13].
What that buyer now owns is a cost programme. Enrique Lores, in the chair since March, has cut the company into three units and about 20 per cent of the staff to reach $1.5 billion of savings [9][8]. Against second-quarter net income annualised at $4.88 billion, $1.5 billion is 31 per cent [33], and on the roughly 876 million shares implied by a $53 billion price at $60.50 it is $1.71 a share a year pre-tax [35]; capitalise that at ten times and the restructuring is worth about $17 a share, more than the premium the market just handed back [36]. That is the bull case and it deserves stating first.
The trouble is what the savings are answering. Volume grew 10 per cent to $486.4 billion in the quarter while revenue grew 5 per cent [16][17], which puts the take rate at about 1.79 per cent against 1.87 per cent a year earlier, a shade under nine basis points given away [31]. Nine basis points on $486.4 billion of quarterly volume is $434 million, or about $1.73 billion annualised [37]. So the price concession over twelve months is larger than the entire savings target, and net margin fell from 16.5 per cent to 14.0 per cent while it happened [32].
On the sources' own numbers the equity has done worse than the share price: down 81 per cent over five years [10], 82 per cent from the July 2021 peak [11], but from roughly $360 billion of market value in 2021 to about $52.6 billion, which is 85 per cent [12][27]. The periods do not line up exactly, so treat it as direction rather than decimal, but a market value falling faster than the price means the share count shrank by something like a fifth, and PayPal retired that stock at prices nobody is offering today [27].
Two readings survive. Bloomberg's people say the situation is fluid and the pair could come back [18], and Lores told investors he would carefully consider any path that created superior value for shareholders [23], which is not the language of a board that wants to be left alone. Michael Burry's range, $75 to $115 with a winning bid near $100, is 65 per cent above the offer that just died [22][34], and if he is right the floor was never at $60.50 in the first place. The duller reading, which this desk leans toward, is that a consortium which walked while the board declined to send a formal reply [7] is not the party that returns 65 per cent higher, particularly with William Blair's Andrew Jeffrey writing that the tech stack lags disruptive competitors [26]. (Block looked at this in April and exited before any formal bid was made [14].)
What would prove that wrong is one line in the next print: revenue growth converging on volume growth. If the take rate steadies near 1.79 per cent, the $1.5 billion lands on a stable base and the $17 a share is real money. If it keeps sliding nine basis points a year, the savings are the fee for standing still.
What to watch
- Whether Advent and Stripe return at a higher number, which Bloomberg's sources explicitly left open.
- Where the cash goes next: buybacks near $53 against the $0.14 dividend payable September 25.
- Whether Lores attaches a date and a dollar split to savings currently framed only as 'over the next several years'.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence72
- Adoption
- Not scored
- Hype gap−8
- Incentives68
- Confidence74
Perspective Coverage
10 publishers- Builder
- Builder 13%
- Operator
- Operator 32%
- Investor
- Investor 55%
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
A consortium of buyout firm Advent and payment processor Stripe has decided to abandon its pursuit of PayPal Holdings, according to people familiar with the matter cited by Bloomberg.
- [2]
The consortium bid $60.50 a share for PayPal, valuing the company at about $53 billion.
- [3]
Stripe and Advent were to take equal ownership of PayPal if the transaction proceeded.
- [4]
PayPal fell 12.71 per cent on Friday to close at $53.66.
- [5]
PayPal closed Thursday at $61.47, dropped about 14 per cent to $52.77 in Friday premarket trading and fell as much as 16 per cent before the open.
- [6]
The $60.50 bid was a 27.7 per cent premium over PayPal's $47.37 closing price prior to the report of the bid.
- [7]
PayPal's directors judged the Stripe-Advent bid too low and the board refused to send a formal response; the suitors pulled out during that standoff.
- [8]
CEO Enrique Lores is leading a restructuring that divides the company into three business units and targets as much as $1.5 billion in cost savings over the next several years.
- [9]
Lores, who took over in March, split PayPal into three divisions covering checkout, consumer financial services and Venmo, and payments and crypto, and the company has moved to cut about 20 per cent of its staff to save $1.5 billion.
- [10]
PayPal shares have fallen 23.41 per cent over the past 12 months and are down 81 per cent over the past five years.
- [11]
PayPal's stock gained 37 per cent in the three months through Thursday's close but is down 82 per cent from its peak level of July 2021.
- [12]
PayPal's market value sits near $52.6 billion, a recovery from roughly $36 billion earlier in the year but far from its peak of roughly $360 billion in 2021.
- [13]
The Wall Street Journal reported that PayPal had found Advent and Stripe's initial bid insufficient and the two sides were negotiating a potential higher price.
- [14]
Block joined Stripe and Advent as a third partner in April, then exited before the formal bid was made.
- [15]
PayPal's second-quarter net income fell 11 per cent to $1.219 billion from $1.37 billion a year earlier.
- [16]
PayPal's second-quarter GAAP net revenues rose 5 per cent to $8.682 billion from $8.288 billion.
- [17]
PayPal's second-quarter total payment volume grew 10 per cent to $486.4 billion.
- [18]
The situation is fluid and Advent and Stripe could still decide to come back at a later date, the people familiar told Bloomberg.
- [19]
Just before the PayPal deal fell apart, Stripe agreed to buy AI model marketplace OpenRouter for more than $8 billion.
- [20]
Mizuho Securities cut its PayPal price target to $51 from $60 while maintaining a neutral stance.
- [21]
Loop Capital cut its PayPal price target to $50 from $62 while maintaining a hold recommendation.
- [22]
Michael Burry said last month that PayPal's true intrinsic value was between $75 and $115 a share and that a winning bid should be around $100 a share.
- [23]
Lores told investors: "If we see levers or a path that we believe would create superior value for our shareholders than executing our current strategy, we would, of course, carefully consider them."
- [24]
Insider Monkey data showed 60 hedge funds held PayPal positions in the second quarter, down from 76 in the prior quarter, with combined holdings of $1.207 billion against $1.217 billion.
- [25]
PayPal's board approved a $0.14 dividend to holders of record as of September 4, 2026, payable September 25.
- [26]
William Blair analyst Andrew Jeffrey wrote last month that PayPal's value proposition and tech stack lag disruptive competitors.
- [27]
Market value fell about 85 per cent from roughly $360 billion to about $52.6 billion, faster than the 81 to 82 per cent fall in the share price, implying a share count roughly a fifth lower.
- [28]
The bid put $13.13 a share of premium into PayPal's price.
- [29]
Friday's $53.66 close retains $6.29 of the $13.13 premium the bid created, or 47.9 per cent of it, having given back $6.84.
- [30]
Thursday's $61.47 close was 97 cents, or 1.6 per cent, above the $60.50 bid.
- [31]
PayPal's second-quarter take rate was about 1.79 per cent against about 1.87 per cent a year earlier, a decline of just under nine basis points.
- [32]
PayPal's second-quarter net margin fell to 14.0 per cent from 16.5 per cent, about 249 basis points.
- [33]
The $1.5 billion savings target equals about 31 per cent of second-quarter net income annualised at $4.88 billion.
- [34]
Burry's suggested winning bid of about $100 a share is 65 per cent above the $60.50 offer.
- [35]
A $53 billion valuation at $60.50 a share implies about 876 million shares, on which $1.5 billion of savings is $1.71 a share a year pre-tax.
- [36]
Capitalised at ten times, $1.71 a share of annual savings is about $17 a share of value.
- [37]
Nine basis points of take rate on $486.4 billion of quarterly volume is about $434 million a quarter, or roughly $1.73 billion a year, more than the $1.5 billion savings target.
- [38]
Average hedge-fund position size rose to about $20.1 million from $16.0 million as the number of holders fell.
Sources
10 independent publishers whose own reporting we read for this story.
- americanbanker.comStripe, Advent suspend their pursuit of PayPal
1 article · August 28, 2026
- crowdfundinsider.comStripe, Advent Pulls Plug on PayPal Acquisition
1 article · August 28, 2026
- cryptopolitan.comStripe and Advent drop $53 billion bid for PayPal, shares slide
1 article · August 28, 2026
- finance.yahoo.comPayPal Stock Tumbles on Report Advent and Stripe Are Dropping Their Takeover Bid
3 articles · August 30, 2026
- fool.comWhy PayPal Stock Just Crashed | The Motley Fool
2 articles · August 28, 2026
- morningstar.comPayPal's stock sinks as suitors reportedly walk away from their takeover bid | Morningstar
2 articles · August 28, 2026
- proactiveinvestors.comPrediction market all but rules out a Stripe-PayPal deal as suitors walk away | NASDAQ:PYPL, XETRA:2PP
2 articles · August 28, 2026
- pymnts.comAdvent, Stripe Abandon $50 Billion Pursuit of PayPal
2 articles · August 28, 2026
- qz.comStripe and Advent abandon $50 billion bid for PayPal
1 article · August 28, 2026
- seekingalpha.comPayPal: The Deal Is Off, So Let's Now Focus On What Matters (NASDAQ:PYPL) | Seeking Alpha
2 articles · August 31, 2026
Topics and entities
Topics
- Corporate turnaround
- Digital payments
- Mergers and Acquisitions
- Fintech