At its current valuation of about $150 billion, PayPal ( PYPL -1.47% ) is still a very expensive company, but there are some companies such as Apple that could swing it. In this segment from “The Future of Fintech,” recorded on Feb. 3, Motley Fool contributors Matt Frankel and Jason Hall consider the possibility of PayPal as a takeover target.
Matt Frankel: One question that someone brought up to me on Twitter that I thought was an interesting one, is PayPal now a takeover target at its current valuation? At the current valuation PayPal’s still a very expensive company at about $150 billion. But there are some companies that could swing that. Apple is one that could buy PayPal with its cash. I actually think it wouldn’t be a bad fit for Berkshire Hathaway, Warren Buffett’s been looking for a big acquisition. They have enough cash on hand to buy PayPal.
Jason Hall: And it fits too in terms of like that steady cash cow business with great management that they can leave in places to continue to run it.
Matt Frankel: Raise, instead of keeping $150 billion on the sidelines, Buffett would love to have five billion dollars of annual free cash flow coming from that. I don’t think it’s likely.
Jason Hall: Nobody is going to buy it for this price because shareholders aren’t going to sell it for this price.
Matt Frankel: No. I mean but at a 20-30 percent premium, it’s still within the realm of possibilities.
Jason Hall: Yeah. I agree.
Matt Frankel: It’s more likely than it was a few weeks ago.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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