PayPal Acquires Two Companies Totaling US$520 Million

Paypal (NASDAQ:PYPL) followed through on its investor day conference promises where it emphasized on digital payments as it acquired Simility on Thursday (June 21) and Hyperwallet on Tuesday (June 19).

PayPal in its release on Thursday said the acquisition of Simility will enhance its ability to deliver fraud prevention and risk management solutions merchants globally.

The company said that it will acquire Simility, a leading fraud prevention and risk management platform for US$120 million in cash.

Bill Ready, COO of PayPal said that together with Simility they will be able to put more control in the hands of the merchants to fight fraud.

“Digital commerce has exploded, and fraudsters have taken note, adapting and developing new methods to carry out their crimes,” Ready said in a press release.

Further, PayPal said its acquisition of Hyperwallet for US$400 million will enhance its payout capabilities by improving the company’s ability to provide an integrated suite of payment solutions to e-commerce platforms and marketplaces around the world.

Hyperwallet, a global payout platform provides growing organizations with a fast and efficient way to distribute funds to payees anywhere in the world.

“By acquiring Hyperwallet, we will strengthen our ability to provide an integrated end-to-end solution to help e-commerce platforms and marketplaces — however large or small — leverage world-class payout capabilities in over 200 markets,” Ready said in the press release.

The transaction of Simility is expected to close in the third quarter of 2018 while the transaction of Hyperwallet is expected to close in fourth quarter of 2018.

On completion of the Hyperwallet transaction, PayPal and its subsidiary Braintree will gain localized, multi-currency payment distribution capabilities in more than 200 markets.

Braintree is a division of PayPal that specializes in web and mobile payment solutions for e-commerce companies.

Hyperwallet CEO Brent Warrington said that he i excited to join the PayPal family and that the company is closer to its vision of ‘paying the planet.’

“Combining forces with PayPal will not just enhance our payout solutions but enable us to provide an integrated suite of payment capabilities to e-commerce platforms and marketplaces almost anywhere in the world,” Warrington said in a separate post.

According to a report from Statista, global retail e-commerce sales worldwide is expected to touch US$4.88 trillion by 2021 with the number of digital buyers expected to cross 2.14 billion in 2021.

Another report from Statista show that the preferred payment method of online shoppers worldwide is credit card at 42 percent followed closely by electronic payment like PayPal at 39 percent.

It has to be noted that PayPal acquired Swiss payment startup iZettle in May for US$2.2 billion.

Shares of PayPal closed the trading session on Thursday (June 21) at $85.97 and was 0.02 percent up over the one day trading period. However, the stock gained 1.6 percent since Tuesday (June 19).

PayPal has a strong buy ranking on TipRanks with an analyst target price of $89.06. On TradingView, PayPal has a buy ranking with 14 verticals in favour, 10 neutral and two against.

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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.