PayPal Acquires Honey for $4 Billion

On November 20, PayPal announced that it is set to acquire Honey, a shopping and rewards deal-finding browser extension, for $4 billion. The deal is mostly cash. The acquisition is set to close in the first quarter of 2020. Honey raised $49 million from investors to date and was profitable on a net income basis for 2018.

Honey works with 30,000 online stores and retailers, so when a user is shopping from one of those retailers, the Honey extension works to find coupons for items in a user’s cart and to apply the coupons automatically.  

The acquisition will allow PayPal to be involved with multiple places in the customer journey: checkout, with PayPal’s core payments processing business, and coupon discovery. Honey has 17 million current monthly active users; PayPal wants to add Honey to its platform for exposure to 300 million users. PayPal works with 24 million merchants, who will now be able to offer more personalized promotions.

“What’s exciting is that we can take the functionality Honey now offers — which is product discovery, price tracking, offers and loyalty — and build that into the PayPal and Venmo experiences,” John Kunze, PayPal SVP of Global Consumer Products and Technology said.

Honey applies the coupon code that results in the lowest price. It also notifies users to lower prices, has tools for finding deals and tracks price history for items on Amazon. Its 30,000 merchants include fashion, technology, travel, and pizza delivery. In 2018, Honey reported that more than $800 million was saved by its 10 million members. To date, more than $2 billion had been saved by its 17 million users.  

“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,” Dan Schulman, president and CEO of PayPal said. “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.”

“Honey’s vision has always been to give consumers the tools they need to make the best decisions with their money,” George Ruan, co-founder of Honey said. “PayPal shares that vision and together we can build powerful commerce capabilities that create real value for both consumers and retailers around the world.”

The acquisition will help accelerate growth across both companies, helping both consumer and merchant engagement. The move will help Honey grow by reaching PayPal and Venmo’s 275 million-plus users and allowing exclusive offers for PayPal’s 24 million merchants. Honey will help PayPal reach consumers before checkout and will likewise help PayPal’s merchants to get more customers through offers that are personalized, timely, and shared across channels.

According to PayPal’s press release, Perella Weinberg Partners LP is the sole financial advisor to PayPal and Skadden, Arps, Slate, Meagher & Flom LLP is PayPal’s legal advisor. Qatalyst Partners is Honey’s sole financial advisor and Latham & Watkins, LLP is Honey’s legal advisor.