Shortly after PayPal's IPO, the company was acquired by eBay. PayPal that allows consumers to make and accept payments over the Internet without using a credit card, has much of its business revenue coming from eBay auctions.
eBay acquires all of the shares of PayPal in a tax-free, stock-for-stock transaction using a fixed exchange ratio of 0.39 eBay shares for each PayPal share. Based on eBay's stock price on July 5, 2002, the acquisition is valued at $1.5 billion
With the acquisition, eBay gains control of the popular electronic payment service. The acquisition supports the company's mission to create an efficient global online marketplace.
eBay itself has launch Billpoint as its payment method. But despite heavy promotion, Billpoint has struggled in competing with PayPal.
"eBay and PayPal have built vibrant user networks on the internet," said PayPal's Peter Thiel in a statement. "The beauty of this deal is that it will allow us to offer our communities new tools and added flexibility to do more business."