PayPal says it is currently not pursuing Pinterest acquisition

October 25, 2021

By Krystal Hu and Anirban Sen

(Reuters) – PayPal Inc is not pursuing an acquisition of Pinterest Inc at this time, the digital payments company said on Monday, after several media last week reported on its talks to buy the digital pinboard site for as much as $45 billion.

The latest development is a blow for Pinterest, which is currently grappling with the twin challenges of losing its co-founder Evan Sharp and a slowdown in user growth that has hampered its future prospects.

The allure of Pinterest shareholders getting some of the payment giant’s stock is now off the table, as is the prospect of getting access to PayPal’s massive user base.

PayPal did not provide additional details in its one-line statement. Both companies did not respond to further requests for comment.

Reuters and other media reported on the deal talks last week. At the time, sources had told Reuters that PayPal had offered $70 per share, mostly in stock, for Pinterest.

Aided by a boost in digital payments during the COVID-19 pandemic, PayPal’s shares had risen over 35% in the past 12 months, giving it a market capitalization of nearly $320 billion, prior to the reports on its talks with Pinterest.

Since then, however, PayPal’s shares have shed 12% of their value, with experts and analysts blaming the poor investor reception for the talks collapsing, while others highlighted challenges around integrating Pinterest within PayPal.

“An acquisition of Pinterest would introduce significant integration risk, notably in terms of culture and execution as running a platform primarily focused on driving user engagement and advertising would require PayPal to use muscles it isn’t accustomed to using,” said Tien-tsin Huang, a payments analyst at JP Morgan, in a note to clients.

PayPal’s shareholders reacted positively to news of the talks no longer being active. The digital payments company’s shares were trading up 3.6% in mid-day trading. Pinterest’s shares, which had surged 13% after the deal talks were reported last week, gave up nearly all its recent gains and slumped about 12% to $51.1 per share.

PINTEREST AT CROSSROADS

Sharp founded the online scrapbook and photo-sharing platform in 2010 with Ben Silbermann, who is the company’s chief executive officer, and Paul Sciarra, who left in 2012.

Earlier in October, Sharp said he would step down as chief creative officer to join LoveFrom, a firm led by Jony Ive, the designer of many Apple Inc products.

As lockdowns have eased globally, Pinterest has warned about slowing user growth, especially in the United States, which accounts for a majority of its user base. Pinterest has said it expects growth mainly through deeper engagement with existing users, rather than new sign-ups.

In the June quarter, Pinterest’s overall monthly active users (MAUs), a widely watched metric, rose by only 9% to 454 million, after having jumped 30% in the prior quarter.

The Pinterest deal would have been the biggest acquisition of a social media company at the reported price, far surpassing Microsoft Corp’s $26.2 billion purchase of LinkedIn in 2016.

It would have also allowed PayPal capture more e-commerce growth, as more shoppers increasingly buy items they see on social media, often following “influencers” on platforms such as Instagram, TikTok and even Pinterest.

PayPal, among the big pandemic winners, has been on an acquisition spree of late, having bought Japanese buy-now-pay-later (BNPL) firm Paidy for $2.7 billion earlier this year.

It also acquired Happy Returns, a company which helps online shoppers return unwanted merchandise, for an undisclosed sum in May to bolster its e-commerce offerings and to build on its $4 billion acquisition of online coupon finder Honey Science in 2019.

(Additional reporting by Juby Babu, Niket Nishant, Shubham Kalia and Sachin Ravikumar in Bengaluru; Writing by Anirban Sen; Editing by Anil D’Silva and Edward Tobin)

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