According to Fortune, potential acquisition options are being explored by Circle, with Coinbase identified as the primary interested party.
Circle Internet Financial, the company responsible for issuing USDC, is proceeding with its intended initial public offering. However, informal discussions regarding a potential sale have been held behind the scenes with Coinbase and Ripple.
A valuation of $5 billion is reportedly being pursued by Circle, either through an acquisition or by entering the public markets, as stated by Fortune.
Coinbase Emerges as the Leading Contender
It was stated by one banker that “if Coinbase expressed interest in acquiring them, Circle would agree to a sale without hesitation.” Although the initial public offering plans remain in place, no official terms or roadshow details have yet been disclosed.
Coinbase is considered the most probable acquirer, as Centre Consortium was co-founded by the two firms in 2018 for the issuance of USDC, and revenue from reserve interest continues to be jointly shared by them.
Favorable terms have been granted to Coinbase, including full entitlement to revenue generated from USDC maintained on its platform. Additionally, influence is held by Coinbase over Circle’s partnership arrangements and intellectual property rights.
Interest has also been expressed by Ripple, with a reported offer ranging between $4 billion and $5 billion; however, that proposal was ultimately declined.
A potential deal could be financed by Ripple through the utilization of its substantial XRP reserves, which are valued at over $100 billion when including tokens held in escrow.
However, Coinbase, possessing $8 billion in cash and the capacity to generate capital through public markets, is regarded as a more financially robust contender. According to Fortune, Coinbase CEO Brian Armstrong stated on May 14 that Circle’s IPO would not impact their existing commercial relationship, while also suggesting a willingness to consider future transactions.
An increase in merger and acquisition activity has been observed at Coinbase this year, marked by purchases such as Deribit and Spindle. While Circle’s IPO ambitions may be supported by the recent successful public debut of eToro, the option of a strategic sale continues to be considered.
