PayPal is reported to be acquiring mPOS specialist iZettle for $2.2bn. PayPal is paying double the amount that iZettle, which is focused on Europe and Latin America, was targeting in its IPO, which was due to take place at the end of this month.
iZettle would become only the latest star of the Swedish tech scene to be bought up by a bigger US rival after both Skype and Mojang were bought by Microsoft before being able to list. The deal is likely to fuel anxiety over how few of the prospects in European technology resist the urge to sell out and instead try to develop into big companies to rival their US competitors.
“The retail world is increasingly becoming a multi-channel world as the mobile phone has blurred the distinction between online and offline sales. Small businesses are searching for one-stop-shop solutions that can solve all their payments requirements,” said Dan Schulman, PayPal’s president and chief executive.
“You never start a company planning to sell it,” commented Jacob de Geer, CEO and Founder iZettle. “But this is a very exciting way for the company to continue its vision. It gives us steroids to speed the company’s growth. We had been pushing our IPO for a long time and pretty late in the process our discussions with PayPal intensified.”
iZettle first shot to attention for its portable credit card readers used by everyone from coffee shops to homeless magazine sellers and has since broadened out to appeal to small businesses and their e-commerce operations.
Its main rival is Square, but Square and iZettle compete only in the UK as the Swedish group has mostly stuck to Europe as well as Mexico and Brazil. iZettle, whose owners include Mastercard, American Express and Santander, as well as venture capital firms such as Index Ventures and Dawn Capital, was hoping for a valuation of about $1.1bn in its listing.
“The sum offered was just so much they couldn’t fail to accept it,” said a person familiar with iZettle’s management. iZettle is still lossmaking, making negative earnings before interest, tax, depreciation and amortisation of minus SKr232m ($27m) last year on revenues of SKr776m. As part of its IPO process, it said it was aiming to break even by 2020.