Key Takeaways
- Ripple’s $5B bid for Circle, likely involving XRP and cash, was turned down.
- The company is still eyeing a $5B IPO despite exploring acquisition talks.
- Coinbase’s equity ties and revenue-sharing deals make it a natural buyer.
Circle Internet Financial, the firm behind the $32 billion stablecoin USDC, is navigating a pivotal moment. It has been quietly considering buying either Ripple Labs or Coinbase, according to several insiders from banks, as it readies to go public by proceeding on two tracks concurrently, demonstrating as much ambition as pragmatism in an uncertain market environment
Sources revealed that Ripple tabled an acquisition offer between $4 and $5 billion, below Circle’s IPO target. That bid, reportedly a mix of XRP tokens and cash, was ultimately declined.
Ripple’s proposal was supported by its substantial reserves, comprised of 4.56 billion XRP valued at approximately $11.77 billion and 37.13 billion XRP in escrow, amounting to approximately $95.7 billion. Not even the strong balance sheet could impress Circle, which perhaps wanted an unblotted structure or better valuation.
Coinbase’s CEO, Brian Armstrong, indicated no deal is near but left it open, stating the exchange is continually in search of M&A prospects. Coinbase, having $8 billion in liquidity as well as the advantage of being a public company, could raise capital quicker, which means it is a better suitor than Ripple in the long term.
Circle and Coinbase: “Already Halfway Merged”
Since 2018, Coinbase and Circle have had an exclusive partnership within the Centre Consortium. Even as the consortium was disbanded in 2023, its joint interests in USDC haven’t diminished. Coinbase continues to receive up to 100% of revenues when USDC is held on its platform, an arrangement outlined within Circle’s S-1 filing.
That level of integration has made many private equity players consider Coinbase as the most likely acquirer. The crypto exchange has control in approving new third-party USDC partnerships as well as influence in case of insolvency of an intellectual property owned by the company.
These legal entanglements might complicate further attempts at acquisition, affirming that Circle and Coinbase are “halfway merged.” However, insiders report that if Coinbase is willing to acquire Circle, it won’t require much persuasion.
eToro’s IPO Surge Renews Hopes for Circle’s Public Debut
The company filed for its highly anticipated IPO in early April, but no terms or roadshow were released. Although market momentum is picking up, as evidenced by eToro’s 29% pop on its day one, uncertainty persists. Markets closely observe: its fate might provide an indication of whether or not the IPO window is really open to crypto companies.
In the meantime, Coinbase just entered into the S&P 500, driving its stock price to $265 and taking its valuation to over $56 billion. With that sort of traction and backing, any Circle acquisition, if it materializes, might be coming from within, not outside in.
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