Square Inc., the payments startup co-founded by Twitter Inc. Chairman Jack Dorsey, has authorized a tender offer of 1 million shares at $135.28 each, valuing the closely held company at $5 billion, people with knowledge of the matter said.

Rizvi Traverse Management LLC and other investors are seeking to buy the stock, which isn’t traded publicly, from employees and early shareholders, said the people, who asked not to be identified because the deal is private. Square was valued at $3.25 billion in August 2012.

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