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

Sara Salinas and Chloe Aiello | CNBC

PayPal (PYPL) confirmed on Thursday it's reached a deal to buy payments start-up iZettle for $2.2 billion — the biggest acquisition in its history.

U.S.-based PayPal already operates in more than 200 countries around the world but is working to expand its offerings. IZettle provides mobile card readers and other digital payment products to small businesses. A merger would catapult PayPal into hundreds of thousands of brick-and-mortar storefronts globally in an effort to bring its digital payments tool into physical retailers and compete with companies, like Square.

PayPal hopes to reap the advantages of the merger right away, and anticipates financial benefits will kick in around the third quarter, Bloomberg previously reported. IZettle expects to generate $165 million in revenue in 2018, and process about $6 billion on its platform.

iZettle, which is based in Sweden, said last week it would list an IPO on the Nasdaq in Stockholm sometime this year, and said at the time it would not be pursuing a sale as alternative to an IPO.

"We believe that the listing will support our continued growth, our strategy and provide us with improved access to capital markets," CEO Jacob de Geer told CNBC at the time.

Shares of PayPal gained 1.8% during regular trading, and continued edging up near 1% after the bell.

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