eBay Buys Braintree For $800 Million

EBay and its payments subsidiary PayPal have acquired payments gateway Braintree for $800 million in cash, the two companies announced on Thursday.

The move comes after weeks of reports and speculation that Braintree was shopping itself to the likes of PayPal, Square and Google, and that the company eyed a $1 billion valuation. TechCrunch first reported that Braintree and PayPal could be in talks on September 5.

“Braintree is a perfect fit with PayPal,” eBay President and CEO John Donahoe said in a statement. “Bill Ready and his team add complementary talent and technology that we believe will help accelerate PayPal’s global leadership in mobile payments. Together, we expect that PayPal and Braintree also will accelerate our leadership in supporting developers who are creating innovative solutions for next generation commerce startups.” 

In fact, John Lunn, head of PayPal’s developer relations, cites Braintree’s “innovation and speed” as attractive attributes that will enable PayPal to move more quickly in deploying new solutions given its ability to attract and service entrepreneurs who want to payment enable their applications.  

Founded in 2007, Braintree now sees about $12 billion in annual payments, with about one-third of that number coming via mobile, as TechCrunch notes. The Chicago-based company has raised $69 million in outside funding, and is used by high profile startups like Airbnb, Uber and Fab, among others. At least one analyst suggests that Braintree’s sale to eBay was between a 7.4 – 9.5 multiple of net revenue, somewhat similar (on the low end) to the Cybersource 7.5 multiple when it sold to Visa for $2Billion in 2010.  

Last year, Braintree acquired mobile payments startup Venmo for $26.2 million, which TechCrunch cites as a big part of what made the company so attractive to PayPal. PayPal product chief Hill Ferguson told AllThingsD that it’s “too early to tell how exactly Venmo will be used at eBay.” 

According to the release, Braintree will operate as a separate unit within PayPal and Ready will stay on and report directly to PayPal President David Marcus. Braintree’s management team and employees are expected to stay on board as well.

The deal is expected to close some time in Q4 2013. For more on how Square is looking to move forward after Braintree’s sale, click here.