Although Apple Inc. (NASDAQ:AAPL) was said to have considered buying payment services provider Square, Google Inc (NASDAQ:GOOG) is seen by many as being the more likely buyer. Re/code reported that both technology giants were in talks with the company.
Why Google, not Apple, might buy Square
There are several reasons why Google Inc (NASDAQ:GOOG) is expected to be the company most likely to buy Square. Perhaps the most obvious reason is Square’s valuation. Google is known for buying very well-known companies at hefty prices. Apple Inc. (NASDAQ:AAPL), on the other hand, tends to buy smaller, lesser known companies at lower values than what Square would be valued at.
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In addition, today’s report suggests that Apple Inc. (NASDAQ:AAPL) has since decided not to buy Square. It’s possible that it could have something to do with the valuation of the company. Specifically, an offer in the range of $8 billion was mentioned as a possibility. However, Re/code’s sources indicated that the company doesn’t have the business case to support the 50% premium over the$5 billion it raised in its secondary offering.
Square CEO would prefer Apple
Square CEO Jack Dorsey is also said to be hoping a deal with Apple Inc. (NASDAQ:AAPL) would be reached rather than with Google Inc (NASDAQ:GOOG). He reportedly sees his company’s values and design as being more aligned with that of Apple. The link in the design makes sense because the company’s hardware chief was at Apple for over eight years.
Also he was said to be put off by Google during the acquisition talks between Google and Twitter Inc (NYSE:TWTR), where he had worked.
Apple rumored to be working on payments platform
The main reason Apple Inc. (NASDAQ:AAPL) was said to have decided not to buy Square is because what Square would bring to the table wouldn’t help much with what Apple wants to do. The technology giant wants to make it easier for iPhone users to complete purchases using their iPhone. Square, on the other hand, is in the offline payments industry.
Google Inc (NASDAQ:GOOG) may be interested in the company so that it could collect more data about its users. The company already offers Google Wallet, so Square’s offline payment processing services could be seen as the search giant’s next step in payments.
Square could go public
Technically, Square isn’t really officially sale. However, some believe the company will go public through an initial public offering by the end of this year. Sources told Re/code that the company would test the markets. However, the site’s sources now don’t think it will have an IPO.