SAN FRANCISCO: PayPal has offered to buy digital pinboard site Pinterest for $45 billion, a combination that could herald more financial technology and social media tie-ups in e-e-commerce.
It would be the biggest acquisition of a social media company, surpassing Microsoft’s $26.2 billion purchase of LinkedIn in 2016. Acquiring Pinterest would allow PayPal to capture more of that e-commerce growth and diversify its income through advertising revenue.
The deal talks come as internet shoppers increasingly buy items they see on social media, often following “influencers” on platforms such as Instagram and TikTok.
PayPal has offered $70 per share, mostly in stock, for Pinterest. It hopes to successfully negotiate and announce a deal by the time it reports quarterly earnings on November 8.
The online payments provider was among the big winners of the COVID-19 pandemic, as more people used its services to shop online and pay bills. Its shares have risen about 36% in the last 12 months, giving it a market capitalization of nearly $320 billion.
Pinterest was valued at about $13 billion when it went public in 2019. It also saw a huge spike in users looking for crafts and DIY project ideas, as lockdown curbs kept people at home.
As lockdowns eased, Pinterest has warned about slowing user growth, especially in the United States, its largest market. It has said it expects revenue growth mainly through deeper engagement with existing users rather than signing up new ones.
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The market has valued Pinterest shares more cheaply than those of some younger social media platforms such as Snap but higher than more mature companies such as Twitter.
Pinterest is at a crossroads after co-founder Evan Sharp announced last week he would step down as chief creative officer to join LoveFrom, a firm led by Jony Ive, the designer of many Apple products.
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.
PayPal had been looking to boost its e-commerce offerings in recent years through acquisitions. It bought online coupon finder Honey Science in 2019 for $4 billion and Japanese buy-now-pay-later (BNPL) firm Paidy for $2.7 billion earlier this year. It acquired return-service provider Happy Returns in May.
Social media platforms that have not pursued mergers with fintech firms have been working on ways to allow consumers to buy directly from their platforms. TikTok is testing a way for users to buy products directly on its short video app. It has partnered with e-commerce giant Shopify and in August began allowing retail brands to link their product catalogs to the app.
