PayPal showing (p)Interest
Paypal is rumoured to be in private talks with Pinterest about a potential acquisition.
A large number of sources are reporting a potential buyout of Pinterest by PayPal.
PayPal Holdings Inc has offered to buy digital pinboard site Pinterest Inc for $45 billion, people familiar with the matter said on Wednesday, a combination that could herald more financial technology and social media tie-ups in e-ecommerce.
Pinterest stock spiked as much as 13% in midday trade yesterday before being halted.
The move is something of an oblique move by the fintech giant. It is clear that social, payments, and e-commerce are converging and will one day be indistinguishable. Certainly Facebook has made number of moves in this direction already. What makes the story-line even more tantalising are the rumours abounding that Microsoft already made overtures to buy Pinterest for as much as $51B, and was rejected.
The underclass of large cap technology companies have been careful when it comes to potential acquirers. Slack CEO Stewart Butterfield, before the Salesforce acquisition, was careful to publicly state that any potential bid would have to deliver more than money; it would need to materially increase the prospects for Slack to do well in the marketplace.
The buyout rumours appear to be apart of a well controlled leak, so we can assume CEO Ben Silbermann and other senior Pinterest Executives have consciously decided on a deal for less money. However, we can assume the corporate vision post-acquisition will be more inline with Pineterst’s own aspirations.
This is perhaps the acquisition that makes the least sense of the latest round of large technology acquisitions. Let’s not forget that PayPal was spun-out in 2015 from eBay after itself was acquired in 2002 for $1.5B. The circumstances of this latest round of corporate actions are markedly different but it poses a series of difficult questions.
Even small acquisitions can be difficult, large acquisitions at scale can pose daunting challenges. For PayPal to do well it simply isn’t a question of buying the right asset - they certainly aren’t paying an attractive price - their ability to properly integrate will also be a considerable factor.
The strangest thing about the news is simply how tangential the Pinterest business-line is to the acquirer. It would be unkind to label it as a sign of ‘desperation’ given how many of PayPal’s products appear to be under competitive pressure. Venmo has lost considerable market share to Square’s CashApp, and more traditional business lines have been playing catch-up with the likes of Afterpay and the BNPL incumbents.
I’m looking forward to seeing how the details develop.