PayPals parent company eBay has entered into an agreement to buy online payment processor Braintree for $800 million in cash, a deal thats expected to close in the fourth quarter pending regulatory approvals.
Braintree is a perfect fit with PayPal, said eBay Inc. president and CEO John Donahoe in a Sept. 26 press release. [Braintree CEO] Bill Ready and his team add complementary talent and technology that we believe will help accelerate PayPals global leadership in mobile payments. Together, we expect that PayPal and Braintree also will accelerate our leadership in supporting developers who are creating innovative solutions for next-generation commerce startups.
Braintrees payment platform powers companies such as Airbnb, OpenTable, TaskRabbit and Uber. Once the acquisition is completed, Braintree will continue to operate as a separate service within PayPal under Ready, who will report to PayPal President David Marcus. Braintrees management team and employees are expected to stay in place.
PayPal was built on helping entrepreneurs grow great businesses online. Im thrilled to welcome the Braintree team, said PayPal President David Marcus. With this deal I believe that we will accelerate our capabilities for developers, entrepreneurs, merchants and companies that are building the future.
Braintree CEO Bill Ready said: The alignment with PayPal means Braintree can continue to push the boundaries of innovation while expanding into new markets with increased speed and confidence. Our current customers and developer community can expect the same level of support and partnership theyve always enjoyed, coupled with more resources.
Venmo, Braintrees mobile and social P2P application, is part of the acquisition and will help to contribute to PayPals mobile payments capabilities. Braintrees application programming interface will also help PayPal build payments applications for other companies, enhancing PayPals ability to compete with companies that build payment technology for startups, such as Stripe.
PayPal already has a strong presence in mobile, projecting mobile payment volume of more than $20 billion this year. Braintree processes about $10 billion in yearly payments, with about $2 billion in mobile paymentsa foothold in mobile that made Braintree an M&A target, though the $800 million purchase price is below
Braintrees rumored $1 billion asking price, a level that ruled out most smaller companies.
Assuming PayPals acquisition of Braintree closes in late 2013, eBay anticipates an immaterial impact to PayPals 2013 net total payment volume, eBay said in a release.