eBay Announces $800 Million Deal
As the world moves increasingly mobile, almost every company, large or small, has positioned itself to benefit from the phenomena. On Thursday morning, eBay (NASDAQ:EBAY) , everyone’s favorite online auction company made headlines with the announcement of an interesting acquisition. For years the company has played a major role in online payments with its PayPal brand, however, over the last few years increasing competition among smaller players has limited the growth of this brand. One company in particular, Braintree, has started to make a name for itself within the industry. In an effort to curb competition and expand its mobile presence, eBay announced it will be buying Braintree for a whopping $800 million in cash.
If you’re not yet familiar with the brand Braintree, the company provides a global payments platform aimed to work with online and mobile-only startups such as room-rental services and online restaurant-reservation companies including OpenTable. Following the announcement the company stated Braintree will look to fully integrate with PayPal. PayPal, which is one of eBay’s fastest-growing businesses, is looking past processing payments for goods sold online and is expanding its service into physical stores and other areas. Some on the street have already praised the acquisition and believe the deal will be accretive to earnings over the next couple years. Should PayPal make its way into everyday commerce, credit card processing names such as Visa, Discover, and American Express may come under slight pressure in core markets. Moreover, growth within the emerging markets business segment may slow as a result of increasing mobile growth within these countries. It should be a natural transition for customers that are already familiar with the company on their mobile device.
Shares of eBay traded higher by more than 3 percent during the intra-day session to $56 per share at the time of this writing.
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