- Online payment giant PayPal announced it is acquiring Honey Science Corp for about $4 billion. These are the details about the deal.
Online payment giant PayPal announced it would be acquiring shopping and rewards platform Honey Science Corp for about $4 billion. This is PayPal’s largest acquisition so far.
Launched seven years ago, Honey is known for finding and applying coupon codes to popular websites. Consumers benefit from this service by saving money.
Currently, PayPal and its Venmo subsidiary has a total of 275 million active user accounts. The Honey deal is expected to close in 2020. And Honey will add to PayPal’s adjusted profit in 2021.
With this deal, PayPal will become part of the deal discovery experience rather than just acting as a checkout offering. As of right now, Honey has 17 million monthly active users that uses the service for tracking prices, making lists, browsing offers, and participating in rewards programs known as Honey Gold.
Going forward, Honey will be retaining its headquarters and brand in Los Angeles, California. And Honey co-founders George Ruan and Ryan Hudson are joining PayPal where they are going to work on product integrations and scaling the product even more. Honey’s 350 employees are also going to be joining PayPal.
“Honey’s vision has always been to give consumers the tools they need to make the best decisions with their money,” explained Ruan. “PayPal shares that vision and together we can build powerful commerce capabilities that create real value for both consumers and retailers around the world.”
Honey was profitable on a net income basis in 2018. And Honey now works across approximately 30,000 online retailers ranging from travel sites, fashion sites, and food delivery.
“Combining PayPal’s assets and reach with our technology, we can build powerful new online shopping experiences for consumers and merchants,” commented 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.”
“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,” said PayPal SVP of Global Consumer Product and Technology John Kunze via TechCrunch. “When Honey says they’re putting money in the pockets of their customers — that’s perfectly in line with what we want to do. We want to make digital commerce and financial services more affordable, easier to use, more fun and more accessible to people around the world.”
PayPal’s network of 24 million merchant partners will also have the ability to offer personalized promotions to consumers as a way of acquiring new business. And PayPal Credit could potentially become integrated into Honey for financing larger items.
Honey originally started out as a web browser extension that applied coupon codes. And Honey also competes against services like RetailMeNot and Ebates. By attempting to add every eligible promo code during the checkout, it helps merchants see less cart abandonment due to consumers having the confidence about getting the best price.
And Honey also launched features to notify shoppers about the price history, including historical pricing of any product on Amazon. Last year, Honey said it hit 10 million users and helped them save over $800 million. Now Honey has 17 million users and the company helped users save over $2 billion.
“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,” added PayPal president and CEO Dan Schulman. “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.”
Perella Weinberg Partners LP was the financial adviser to PayPal. Skadden, Arps, Slate, Meagher & Flom LLP was PayPal’s legal adviser And Qatalyst Partners was the financial adviser to Honey and Latham & Watkins, LLP its legal adviser.