Jan. 23 at 4:04 PM
$PAYO Key points of my buy rec on Substack:
$PYPL buys Payo a say
$13. They issue floating rate debt to fund it. The cost of that debt is about
$206M +/-
$10M perhaps. Payo should earn about 240m in float income in 2026 and it rises with balance growth over time (growing 17% lately). PayPal gets the rest of Payo's business - 40m of adj ebitda, plus 175m of expense synergies, plus whatever rev synergies there are - for free, or essentially free cost of funding either way. If rates go down, Payo's lost interest income would be offset by PayPal's lower debt costs. Paypal likely grows balances faster as clients would hold more cash with the newco as it's an investment grade co. The combined company would be a powerhouse in global B2B, with brand, trust, scale, reputation, and established best in class compliance and ability to roll out great products unmatched. Would help PayPal's expand into a growth area and be very accretive to their EPS even paying
$13. They could pay
$16 too!
