US: PayPal and MercadoLibre tie up

MercadoLibre, the Latin America eCommerce technology company, announced Tuesday, March 12, that it intends to offer approximately US$1 billion of common stock.

In a press release, MercadoLibre stated said it will grant underwriters a 30-day offering to buy up to US$150 million of additional shares of common stock and that it inked a deal with PayPal. In the PayPal case, the payment company has agreed to make a US$750 million investment in the company by purchasing common stock. The eCommerce technology company also inked a separate agreement with an affiliate of Dragoneer Investment Group in which it’s buying US$100 million of Series A perpetual convertible preferred stock. The PayPal and Dragoneer investments are contingent upon the closing of the public offering and are expected to close at the same time or shortly after the public offering, the company said in the press release.

“Over the past 20 years, we have heavily invested in developing the preeminent eCommerce and FinTech ecosystem in Latin America,” Marcos Galperin, CEO of Mercado Libre, said in prepared remarks. “We are excited to welcome these investments which will allow us to significantly accelerate our growth. We look forward to accelerating our leadership in eCommerce and payments and foster financial inclusion in Latin America as a result of our alliance with a global leader in the industry such as PayPal.”

Proceeds from the capital raises will be used to expand the company’s eCommerce platform, enhance logistics, and to make investments that improve its position as a provider of financial technology and payments solutions.

“Digital commerce in Latin America is experiencing tremendous growth and MercadoLibre is well-positioned for continued leadership,” said Dan Schulman, president and CEO of PayPal, in the same press release. “We’ve been impressed with the digital commerce and payments ecosystem Marcos and his team have built. We see great opportunities to integrate our respective capabilities to create unique and valuable payment experiences for our combined 500 million customers throughout the region and around the world.”