PayPal reportedly in talks to buy Pinterest in a $45B deal

UPDATE (25.10.2021): PayPal says it is not pursuing deal to acquire Pinterest

US-based online payments behemoth PayPal is in talks to acquire photo sharing and social media company Pinterest for $45 billion, people familiar with the matter said on Wednesday. 

People with knowledge of the matter told Bloomberg that PayPal recently approached Pinterest about a potential deal and have offered $70 per share. That would value Pinterest at about $45 billion for the entire company, including its Class B shares.

PayPal’s offer represents a 26% premium to Pinterest’s closing price of $55.58 on Tuesday and it is equivalent to 62 times the social media company’s earnings before interest, taxes, depreciation and amortization over the last 12 months, according to Eikon.

The talks are at an early stage and may not lead to a deal, sources cautioned. If the deal materializes, it would be the largest acquisition of a social media company, surpassing Microsoft’s $26.2 billion acquisition of LinkedIn in 2016.

Mainly a photo sharing and social media app, Pinterest, which makes money from advertising, also focuses on ecommerce and has been investing in it for a while. In its latest attempt to grow online shopping and advertising on its platform, Pinterest announced new shopping features for brands to promote their products in the past weeks. 

PayPal’s pursuit of Pinterest would be a giant step up from its longstanding image as an online-only checkout button. This, as part of its ambition to become the next global “super app” can bring users to PayPal earlier in their shopping experience and help them discover new products to buy, leading to greater checkout volume.

The Pinterest acquisition would be PayPal’s biggest-ever deal, which went public in 2019 and bought Honey Science Corp. for nearly $4 billion that same year. Founded in 1998, the company had more than $19 billion in cash, equivalents and investments as of June.

Joining Google, Tencent and Facebook, PayPal invested in Gojek, a 5-year Indonesian venture, in June last year. In September, the company announced that it has agreed to acquire Japanese buy now, pay later (BNPL) provider Paidy in a $2.7 billion (¥300bn) deal which will be paid mostly in cash.