PayPal boosts buyback expectations as it announces new deal with KKR

PayPal Holding Inc.
PYPL,
+0.88%
has struck an arrangement with KKR through which KKR-managed funds and accounts will buy up to €40 billion of PayPal’s buy-now-pay-later receivables originated in several European countries, the companies said Tuesday. The deal is expected to close in the second half of the year and initially generate about $1.8 billion in net proceeds that PayPal will use to return cash to shareholders and for general corporate purposes. The transaction is already reflected in the company’s annual forecast for earnings, though PayPal expects to put an extra $1 billion toward stock buybacks this year, for an estimated $5 billion in total. Through the arrangement that was announced Tuesday, the KKR private-credit funds and accounts will acquire “substantially all” of PayPal’s European loan portfolio that is currently held on the digital payments giant’s balance sheet. The KKR funds and accounts will also acquire future originations of eligible loans. The agreement affects loan receivables originated in France, Germany, Italy, Spain and the U.K.