Last week, PayPal announced it plans to buy shopping and rewards platform Honey Science Corporation (Honey) for $4 billion to expand its ecommerce capabilities. TechCrunch reports that the $4 billion price tag will be paid in mostly cash. The acquisition, which is PayPals largest to date, will accelerate growth for both companies, allowing them to provide enhanced shopping experiences for customers while driving sales and conversions for merchants.
Subject to the customary regulatory approvals, the deal should close in the first quarter of 2020. Once the acquisition is complete, Honey co-founders George Ruan and Ryan Hudson will continue to lead the company from its Los Angeles headquarters.
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Honey is amongst the most transformative acquisitions in PayPal’s history. It provides a broad portfolio of services to simplify the consumer shopping experience, while at the same time making it more affordable and rewarding, said Dan Schulman, PayPal president and CEO.
The combination of Honey’s complementary consumer products with our platform will significantly enhance our ability to drive engagement and play a more meaningful role in the daily lives of our consumers. As a partner of choice for our merchants, this is another way that we can help them build and strengthen their customer relationships, provide personalized offers, and drive incremental sales. The combination of Honey and PayPal adds another significant and meaningful dimension to our two-sided platform, Schulman added.
Started in 2012, Honey helps consumers find the best deals online by scouring the internet for promo codes. It offers mobile shopping assistance, a rewards program and price-tracking tools and alerts (DropList). Working with more than 30,000 online retailers, Honey has about 17 million monthly active users, and it helped millions of shoppers find more than $1 billion in online savings in the last year. According to Honeys website, Honey members save an average of $126 per year with an average discount of 17.9%. Honey makes its money by earning a commission from stores where it helps consumers find savings.
Honey co-founders Ruan and Hudson also commented on the deal.
Honey’s vision has always been to give consumers the tools they need to make the best decisions with their money. PayPal shares that vision and together we can build powerful commerce capabilities that create real value for both consumers and retailers around the world, said Ruan.
“Combining PayPal’s assets and reach with our technology, we can build powerful new online shopping experiences for consumers and merchants,” said Hudson. “We’ll have the ability to help millions of retailers efficiently reach consumers with offers that deliver more and more value to Honey members.”
Honey will benefit from access to PayPal and Venmos more than 275 million active consumers and network of 24 million merchants, while PayPal and Venmo will be exposed to Honeys millions of active users. This deal sounds like a win-win for PayPal and Honey, as well as retailers and consumers. It could also help PayPal remain competitive with all the new and emerging payment options including Stripe, Apple Pay, Google Pay and Samsung Pay.