PayPal to buy online coupon site Honey for $4 billion
With new ecommerce deal PayPal moves beyond being a payments business
PayPal will acquire Honey Science for about $4 billion (Dh14.7bn), its largest-ever acquisition, adding a startup that amasses valuable data on consumer buying habits and doles out coupons for online bargains.
About 17 million people use Honey apps or web browser extensions to find discounts at online shopping sites. The startup was profitable in 2018, PayPal said in a statement. Shares of the payments giant were little changed in extended trading.
Honey is valued at almost twice what PayPal paid for its next-largest deal, iZettle, the Swedish provider of small-business services it purchased in 2018, and marks the first major acquisition this year. Chief executive Dan Schulman has signaled that PayPal, with more than $10bn in cash, is on the hunt for more deals after a string of takeovers last year that included Hyperwallet and Simility.
“You can expect us to be acquisitive going forward,” Mr Schulman said on a conference call with analysts this summer. PayPal looks at hundreds of potential deals every quarter and sees them as a way to expand globally and accelerate development of new products, he said. Mr Schulman described acquisitions as “a part of who we are on an ongoing basis.”
Honey, which was founded in 2012, will keep its base in Los Angeles, and the founders will continue to run the business. The company’s services include a browser extension that automatically applies coupons at e-commerce sites. In a statement, PayPal said that Honey’s capabilities will give its customers a better shopping experience, and help merchants drive sales, partly with more timely and personalized offers.
Mark Palmer, an analyst at BTIG, said the acquisition would help PayPal make “significant advances” toward becoming more relevant to users. It could also give customers and merchants a reason to choose PayPal “in the face of increasing competition from tech companies, such as Facebook Pay.”
As a shopping-focused browser extension, Honey has access to large amounts of customer data. Lisa Ellis, an analyst at MoffettNathanson, said that PayPal typically uses that information for purposes like fraud prevention. She added that if there were to be a privacy issue over data at the combined company that limited its use, some abilities, like targeted offers, could be curtailed.
Published: November 21, 2019 08:29 AM