August 17

eBay To Acquire Braintree To Strengthen Its PayPal Business

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Online retailer, eBay Inc (NASDAQ:EBAY) has announced plans to acquire Braintree, a payment platform for around 800 million in cash to further strengthen its PayPal business. The transaction is expected to close by the fourth quarter of 2013 subjected to certain customary closing conditions and regulatory approvals.

“Braintree is a perfect fit with PayPal,” eBay President and CEO John Donahoe said.

Deal to have minimum impact this year on PayPal’s volume

eBay told in a statement that after the deal is concluded, Braintree will be incorporated as a distinct service within PayPal, headed by Braintree CEO Bill Ready. Management team and employees of Braintree will continue with their services.

For 2013, eBay expects marginal impact of the deal on PayPal’s net total payment volume. On eBay’s GAAP EPS guidance, the deal is expected to have a negative impact of $0.01 — $0.03.

PayPal is a global payment platform, owned by eBay, which processes more than 7.7 million payments on a daily basis.

About Braintree

Braintree, which was founded in 2007, had previously received outside funding of $69 million from Accel, NEA, RRE, Greycroft and others. Braintree now handles $12 billion in payments annually, including more than $4 billion on mobile.

Braintree, which has an employee strength of more than 180, facilitate online and mobile businesses globally to receive payments by providing them with a merchant account, payment gateway, recurring billing and credit card storage.

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“The alignment with PayPal means Braintree can continue to push the boundaries of innovation while expanding into new markets with increased speed and confidence,” the Braintree CEO said.

Venmo to strength PayPal’s mobile plans

Payment gateway’s mobile app, Venmo, is a popular app used by people to make payments via mobile devices. Venmo was acquired by Braintree last year for $26.2 million. If the rumors are to be believed, Venmo was a key point of negotiations between Braintree and eBay.

As of now, it remains unclear, how PayPal will integrate Venmo in its platform, but eBay in today’s statement told that the app will “help to contribute to PayPal’s mobile payments capabilities.” For 2013, Paypal is expecting mobile payments volume of over $20 billion.

With Venmo on its side, PayPal now looks stronger to counter the threats from startups in mobile-payments segment, particularly from firms developing so-called digital wallets like Google, Square and Lemon.

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