Square, the mobile payment solution finding favor with an increasingly large number of small and mid-size businesses, is reportedly up for grabs. Citing people “familiar with the matter”, the Wall Street Journal reports that Square is entertaining offers from Google and Apple. Square is flatly denying talks are taking place, despite evidence that suggests they are in trouble.
This comes after a denial from Square, who have said they are not in any acquisition talks. Founded in 2009 by Twitter co-creater Jack Dorsey, Square gained the most notoriety for their Starbucks deal, in which the coffee chain began using Square as their credit processing provider. Charging a flat fee rather than a siding scale, Square streamlines the process for credit card transactions, making it especially attractive to smaller, owner-operated establishments.
The Wall Street Journal claims Square is in talks with Google, Apple, and eBay among others. In a statement, Square again flatly denies any acquisition rumors, saying “We are not, nor have we ever been in acquisition talks with Google, and while we appreciate that Square may be an attractive target for some companies, we have never seriously considered selling to anyone or been in any talks to do so”. To their credit, eBay-owned PayPal also denied being in talks with Square.
The reason for all the acquisition rumors? Square is believed to be eating through cash faster than it’s brought in. Today’s report notes that Square had losses of $100 million on the back of $550 million in revenue. Square is also believed to have squabbled away most of their series funding; $340 million raised since 2009.
When will we hear the end of Square’s acquisition rumors? If The Wall Street Journal’s sources are correct, we could have a solid answer within a year. Square reportedly told a potential buyer that the company had nine months before they tapped into a reserve fund set aside as a last resort — which the Journal claims to have independently verified. If they eat through the reserved cash with no turnaround, it could spell trouble for their independence.
Source: The Wall Street Journal