eBay to acquire PayPal

eBay announced this morning that it is acquiring PayPal. EBay is exchanging 0.39 eBay shares for each PayPal share valuing the acquisition at $1.5 billion. At Friday’s price, the deal values PayPal at $23.61 per share, an 18% premium over PayPal’s Friday closing price. PayPal’s IPO in February sold 5.4 million shares and was priced at $13 per share. A secondary offering of 6 million shares was completed in late June (in which all of the shares offered were by selling shareholders) at a price of $19 per share. The transaction is expected to close around the end of the year.

“eBay and PayPal have complementary missions. We both empower people to buy and sell online,” said Meg Whitman, President and CEO of eBay. “Together we can improve the user experience and make online trading more compelling. We can also capture greater value from the e-commerce opportunities occurring both on and off our site.”

“eBay and PayPal have built vibrant user networks on the Internet,” said Peter Thiel, Founder and CEO of PayPal. “The beauty of this deal is that it will allow us to offer our communities new tools and added flexibility to do more business. Integrating our services is a win-win situation for millions of current and future online consumers.”

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