Stripe and Advent’s pursuit of PayPal is unlikely to end with the target board’s rejection of the initial USD 60.50-per-share proposal, according to dealmakers and industry veterans.

The strategic logic of combining the two payments platforms remains compelling despite disagreements over valuation and significant execution risks, they said.

The offer that Stripe and Advent made earlier this month values PayPal at roughly USD 53bn, representing a premium of about 28% to the undisturbed share price.

While dealmakers and industry veterans expect the board to seek a higher price, greater financing certainty, and stronger deal protections, few believe discussions are over.

“My hunch is this isn’t the last conversation they’ll have,” said Mark Lehmann, vice chair of Citizens Commercial Bank and a longtime Silicon Valley M&A adviser.

There are still “several ducks to line up” regarding a potential acquisition, he said, adding that many shareholders purchased PayPal stock at substantially higher prices and may be reluctant to accept the current proposal as the company’s full value.

Aman Verjee, a former member of the so-called “PayPal Mafia” who spent nearly a decade at the company after helping prepare its original IPO registration statement in 2001, said the strategic rationale for a combination is strong. However, he believes PayPal’s board is likely to seek both a higher valuation and stronger financing commitments.

“PayPal obviously believes it’s worth more than USD 60.50 per share,” he said.

Financing certainty

Verjee expects directors to focus heavily on financing. Based on publicly reported transaction parameters, the acquisition could involve approximately USD 50bn of committed debt financing from major banks such as JPMorgan and Morgan Stanley.

Annual interest expense could approach USD 3bn to USD 4bn under those assumptions, consuming a substantial portion of PayPal’s roughly USD 7bn of EBITDA, he said.

“If I were advising the board, I’d want stronger financing commitments before recommending shareholders support the transaction,” Verjee said.

He added that PayPal would be wise to seek a reverse termination fee worth several billion dollars to compensate shareholders if regulators ultimately block the deal after a review process he expects would be lengthy.

Verjee, now co-founder of Practical Venture Capital, is a PayPal shareholder, although he said his current position is relatively small and consists largely of legacy employee shares held in retirement accounts for his children.

Valuation disconnect

B. Riley analyst Hal Goetsch said PayPal remains an inexpensive strategic asset despite operational challenges that have weighed on its share price in recent years.

He noted that PayPal is a globally recognized franchise processing more than USD 1.8tn of total payment volume annually and said Stripe appears to have identified an opportunity to acquire the Nasdaq-listed company at an attractive valuation.

Stripe, which processes USD 1.9tn of annual payment volume, carries a private valuation of USD 159bn, underscoring the valuation gap between the two companies.

“The implied valuation is what’s surprising,” said Isabelle Freidheim, founder of Athena Capital. While the reported premium is within a range often seen in public-company M&A, PayPal traded at a substantially higher valuation only a few years ago, she said.

Verjee argued that PayPal trades below its intrinsic value despite maintaining double-digit growth in payments volume and profitable operations. He noted that PayPal has traded at roughly 6x-7x EBITDA over the past year, materially below other large payments companies.

The proposed transaction values the company at roughly 10x earnings, compared with about 20x for Visa and 25x for Block, according to Verjee. “The market is valuing PayPal more like a distressed asset than a slow-growth payments company,” he said.

“At current levels, the stock doesn’t appear expensive,” Lehmann agreed.

Other bidders may emerge

Although Stripe remains the most logical strategic acquirer, observers believe other parties could emerge.

Lehmann said PayPal’s user base, brand recognition, and collection of assets could attract interest from additional financial sponsors given the amount of private equity capital currently available.

Freidheim likewise said private equity represents the most realistic source of competing bids, although a transaction of PayPal’s size would probably require a sponsor consortium.

The pool of credible strategic buyers appears limited.

While a small number of large technology platforms could theoretically evaluate PayPal, Freidheim said Stripe offers the clearest industrial rationale.

The Musk connection

PayPal has changed hands before.

In 2000, Elon Musk merged his online financial services company X.com with rival Confinity, whose money-transfer service was called PayPal.

After internal disputes over leadership and strategy, Musk was replaced as CEO by Confinity co-founder Peter Thiel. The business rebranded as PayPal in 2001, went public in February 2002, and was acquired by eBay five months later for USD 1.5bn. In 2015, PayPal spun out of eBay and began trading again as an independent publicly listed company.

Could Musk re-enter PayPal’s orbit as a surprise bidder? He has long discussed building an “everything app” and still lacks a major payments platform for X, formerly Twitter.

Verjee said he recalls discussions with Musk during PayPal’s early years about building a financial super app that would combine payments, banking, and other services.

That vision never fully materialized, and Musk’s priorities are now elsewhere. Between SpaceX, Tesla, xAI, The Boring Company, and Neuralink, his attention is focused on aerospace, automotive, artificial intelligence, neurotechnology, and infrastructure.

Verjee said he would never completely rule out an unconventional move by Musk but considers it unlikely that any of those entities would pursue PayPal.

Payments require regulatory expertise, banking licenses, fraud-prevention capabilities, and extensive compliance infrastructure. “It’s a very different business,” he said.

Consolidating infrastructure

Stripe and Advent’s proposal reflects a broader consolidation of digital payments infrastructure.

Freidheim contends the acquisition is less about combining payment technology than pairing Stripe’s merchant network with PayPal’s consumer ecosystem, including Venmo.

“It’s more about expanding the customer base than simply integrating technologies,” she said. “Ultimately, they want to become the go-to payments platform.”

She described the proposal as part of a wider push by technology companies to control more of the financial infrastructure stack, rather than simply build products on top of it.

“The headline is about payments, but the underlying story is the consolidation of payments infrastructure.”

Lehmann similarly pointed to PayPal’s consumer franchise as one of its most valuable assets.

“The PayPal brand is on almost everyone’s phone,” he said, noting that PayPal’s consumer footprint and Stripe’s merchant network are a natural strategic fit.

Verjee agreed, asserting that Stripe’s merchant infrastructure and PayPal’s approximately 440 million consumer accounts create a highly complementary combination.

He said the principal synergy lies in creating a true two-sided payments network.

If transactions between PayPal wallets and Stripe merchants increasingly settle within the combined platform, the company could reduce its dependence on Visa and Mastercard while retaining economics currently lost through interchange fees, he added.

Verjee also highlighted stablecoins as a second strategic opportunity, citing Stripe’s acquisition of Bridge alongside PayPal’s PYUSD stablecoin and digital-wallet ecosystem.

While plenty of questions remain, Verjee said the industrial logic behind combining Stripe’s merchant network with PayPal’s consumer franchise is unlikely to disappear.