PayPal takes Square with $ 2.2 billion Buy from iZettle

PayPal Holdings is buying the Swedish $ 2,200 million iZettle small business platform to expand in Europe and Latin America and increase its presence in brick and mortar stores.

"Small businesses increasingly want a full set of channel capabilities, a one-stop shop," Dan Schulman, CEO of PayPal (pypl), said in an interview. "IZettle was the perfect fit in many ways."

The agreement is the largest for PayPal based in San Jose, California, and will help it compete with Square (sq), which made a name by helping small businesses and food truck sellers make transactions with credit cards and mobile devices. Founded in 2010 by Jacob de Geer and Magnus Nilsson, iZettle also started with a mobile phone gadget to accept credit card payments. Later this month, iZettle announced plans for an initial public offering and Geer said specifically that the company had no interest in a so-called two-way process that would make it consider a sale as an alternative to the list.

In an interview on Thursday, de Geer said he changed his mind after meeting with the executive team at PayPal. He was convinced that his company could continue to grow substantially under the new owner and that their cultures would be aligned. Continue to lead iZettle.

PayPal said it expects to reap the benefits of the merger almost immediately in certain areas, and that financial benefits will begin shortly after the agreement is closed, which is expected for the third quarter. According to a statement from the two companies, iZettle expects to generate gross revenues of around $ 165 million in 2018, with approximately $ 6 billion of total payment volume expected to be processed on its platform.

"When we think about the combinations and capabilities of PayPal and iZettle," Schulman added, "they set us apart from the rest."

JPMorgan Chase & Co. was the sole financial advisor to iZettle, while PayPal worked with Evercore.


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