PayPal chief executive Enrique Lores is facing an early test of his turnaround strategy after Stripe and private equity firm Advent International made a US$53 billion takeover approach for the struggling payments company.

The consortium has reportedly offered US$60.50 per share, representing a premium of about 28% to PayPal’s previous closing price and sending the company’s shares 17% higher when the proposal became public.

However, analysts and investors have questioned whether the offer adequately values PayPal’s consumer network, cash generation and Venmo business.

William Blair analyst Andrew Jeffrey said the current proposal could be an opening move, suggesting Stripe and Advent may be willing to increase their offer to as much as US$70 per share.

PayPal generated US$6.4 billion in free cash flow last year and held around US$13.5 billion in cash, equivalents and investments at the end of the first quarter, strengthening arguments that the company could command a higher price.

Venmo may also be central to the deal’s appeal. The peer-to-peer payments platform has approximately 67 million monthly active users, while its revenue reportedly increased 20% last year.

A takeover would give Stripe direct access to PayPal’s more than 430 million consumer accounts and allow it to expand beyond its traditional merchant-processing business.

It could also support Stripe’s stablecoin strategy by combining its crypto infrastructure investments with PayPal and Venmo’s consumer distribution networks.

The approach comes only months after Lores took charge of PayPal and announced plans to reorganise the company into three operating divisions, reduce costs by US$1.5 billion and revive growth.

Lores previously helped oversee Hewlett-Packard’s corporate split and later defended HP against an attempted takeover by Xerox.

PayPal has not formally responded to the proposal, which reportedly followed an initial approach in April. Stripe and Advent are expected to seek further discussions, although there is no certainty a transaction will proceed.

The offer has nevertheless established a potential floor for PayPal’s value and could encourage a higher bid or attract rival buyers.