PayPal to join the BNPL race with the acquisition of Paidy

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PayPal Holdings, Inc. has  announced that it has agreed to acquire Paidy, a payments platform and provider of buy now, pay later solutions in Japan, for US $2.7 billion, principally in cash. The acquisition is expected to expand the company’s capabilities, distribution and relevance in the domestic payments market in Japan, which happens to be the third largest ecommerce market in the world.

“Combining Paidy’s brand, capabilities and talented team with PayPal’s expertise, resources and global scale will create a strong foundation to accelerate our momentum in this strategically important market,” Peter Kenevan, vice president, head of Japan at PayPal.

As per the statement, following the acquisition, Paidy will continue to operate its existing business, maintain its brand and support a wide variety of consumer wallets and marketplaces. Russell Cummer and Riku Sugie will continue to lead the Paidy team.

“PayPal was a founding partner for Paidy Link and we look forward to working together to create even more value. Thank you to our community of merchants and users who helped us get to this important milestone,” Sugie, president and CEO of Paidy.

The BNPL sector has been gaining momentum fuelled by the pandemic. Square Inc. also agreed to acquire all of the issued shares in Afterpay by way of a recommended court-approved Scheme of Arrangement for US$29 billion. PayPal, already considered a giant in the sector, also entered Australia last year when it raised the stakes for Sezzle Inc. and Z1P.AX Co Ltd.

(Also read: India’s e-payments landscape, trends and opportunities)

The transaction  is expected to close in the fourth quarter of 2021, and will be minimally dilutive to non-GAAP earnings per share in 2022. BofA Securities is acting as sole financial adviser to PayPal, and White & Case is acting as lead legal adviser with regard to the transaction. Goldman Sachs is acting as the sole financial adviser to Paidy, while Cooley LLP and Mori Hamada & Matsumoto are acting as its legal advisers.

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