PayPal buys Swedish startup iZettle for $2.2 billion

Dwayne Harmon
May 18, 2018

Based in Sweden, iZettle has built a presence in Europe and South America that will allow PayPal to bring its platform to almost 500,000 stores in 11 new countries including France, Germany, Brazil and Mexico.

IZettle, which provides mobile card readers and offers digital payment services to small businesses, is used by nearly half a million merchants.

While PayPal predominates as an alternative payment mechanism for websites and other online merchants, it lacks the kind of hardware and infrastructure to enable small business owners to take card payments via mobile technology.

The takeover comes just weeks after iZettle, creator of an ingenious card-reading device for smartphones, revealed its intention to list on the Stockholm stock exchange.

"Small businesses increasingly want a full suite of capabilities across channels, a one-stop stop", Dan Schulman, chief executive officer of PayPal (pypl), said in an interview.

PayPal, based in San Jose, California, says Stockholm-based iZettle is on pace to process about $6 billion in payments this year.

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iZettle, which officially reaps a unicorn valuation with the $2,2 billion all-cash deal, can now proudly include itself among Swedish tech-giants, de Geer notes.

When complete, the acquisition of iZettle will mean PayPal has an in-store presence in 11 markets in Europe and Latin America.

Until now, iZettle has mainly operated in Europe and Latin America but, with PayPal's backing, the possibility of a stronger entrance into the U.S. market becomes more plausible.

In addition, the deal will help PayPal to offer a better suite of services to its customers.

Earlier this month, iZettle filed paperwork to go public with an offering of shares that valued the company at slightly more than a billion dollars.

The transaction is expected to be approximately $0.01 dilutive to PayPal's previously communicated full year 2018 non-GAAP EPS. The two companies will continue to operate independently until close. J.P. Morgan Securities plc is acting as sole financial adviser to iZettle, while Gernandt & Danielsson is acting as its legal adviser.

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