Shares of Fiserv (FISV) jumped 4.7% on Wednesday amid reports that Stripe, Advent International, and possibly Block have offered to acquire PayPal Holdings (PYPL) for about $53 billion, or $60.50 per share. The news sent PayPal stock up 17.1% by mid-morning.
The PayPal Bid
According to CNBC, the consortium has proposed buying PayPal at a nearly 28% premium over its previous closing price. None of the companies have commented, and the deal is far from certain, but investors are betting on a potential acquisition.
Why Fiserv Benefits
Fiserv and PayPal operate in the same fintech space but serve different segments: PayPal focuses on consumer-to-consumer payments, while Fiserv provides back-end processing for businesses. The key is valuation. At current prices, PayPal trades at 8.9 times trailing earnings, while Fiserv is even cheaper at 8.4 times trailing earnings and just 6.2 times forward earnings. Both companies have similar projected growth rates of around 5.8% annually.
If Stripe and Advent see value in PayPal at 8.9x earnings, the logic suggests Fiserv could be an even more attractive target. The market appears to be pricing in that possibility, driving Fiserv shares higher alongside the PayPal speculation.