PayPal, the online payments company, is in talks to acquire social media group Pinterest for about $45bn, in what could result in one of the largest corporate takeover deals of the year, said two people with direct knowledge of the matter.
Pinterest’s board received a mainly stock-based $70 a share offer from PayPal, which is seeking to capitalise on its relatively high share price as currency for a transaction. The timing of the approach remained uncertain.
Shares in Pinterest jumped more than 13 per cent to $63.31 on the news of the talks, which were first reported by Bloomberg. PayPal stock fell more than 5 per cent. The share price rise gave Pinterest a market capitalisation of more than $40bn.
Pinterest declined to comment. PayPal did not respond to requests for comment.
PayPal recently acquired Paidy, a Japanese “buy now, pay later” company for $2.7bn, as it seeks to move into the popular financial service that allows consumers to spread costs over a period of time, usually without paying interest.
The company has been using its strong stock price, which grew more than 150 per cent since the low of March 2020, to fuel its acquisition strategy to become a super app like China’s WeChat, which offers payments and also acts as a social media platform.
In July, Dan Schulman, PayPal’s president, said “consumer wallet super app” was being rolled out in the US with savings, ecommerce, cryptocurrency and messaging capabilities. The company is also in the early stages of building a stock trading platform, according to people familiar with the matter.
Pinterest has more than 450m users, who can post — or pin — images of their interests on to boards and message others. It has also been deepening its push into ecommerce with new shopping tools.
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Since making its stock market debut in April 2019, Pinterest’s shares have almost trebled. Its business initially benefited from the pandemic as stay-at-home mandates forced people to shop online, but it has had difficulty keeping up momentum.
The San Francisco-based company’s July earnings report fell short of Wall Street’s expectations with lower-than-expected user growth, wiping about $8bn from its market value in a single day.
News of the deal talks comes a week after Evan Sharp, Pinterest’s co-founder and design chief, announced that he was stepping down from his role. Pinterest has recently faced criticism over its internal culture, including allegations of gender discrimination from former employees.
The Financial Times reported earlier this year that Microsoft had also approached Pinterest about a potential deal as it sought to build a portfolio of active online communities, though talks were not active at the time.