PayPal is buying payments start-up iZettle for $2.2 billion ahead of IPO

PayPal buys Swedish start-up iZettle for $2.2bn in its biggest ever deal

The deal announced Thursday marks the largest acquisition in PayPal's 20-year history and intensifies its competition with Square, a payment processor started by Twitter co-founder and CEO Jack Dorsey.

The digital payments giant PayPal Holdings is in advanced talks about a takeover of iZettle in a move that would gatecrash one of the European technology sector's biggest stock market flotations.

PayPal is preparing to take over Swedish payments app iZettle, just a week after it announced plans to float. The company also offers services such as cash advances and an ecommerce offering in a bid to provide a full-fledged commerce platform for small businesses.

Schulman described the merging of iZettle and PayPal as a "strategic fit" combining shared values and culture with complementary product offerings and geographies.

Buying iZettle will expand PayPal's reach into shops in Brazil, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Spain and Sweden. The company's CEO, Jacob de Geer, will continue to lead the business under PayPal. IZettle expects to generate $165 million in revenue in 2018, and process about $6 billion on its platform.

PayPal said it hopes to be able to reap the advantages of the merger nearly immediately in certain areas, and that the financial benefits will kick in shortly after the deal closes, expected in the third quarter.

Evercore is acting as sole financial adviser to PayPal, and Skadden, Arps, Slate, Meagher & Flom LLP and Roschier are acting as its legal advisers with regard to the transaction.

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