M&A News: Circle Considers IPO, but Might Sell to Coinbase or Ripple Instead

Circle Internet Financial, the company behind the USDC stablecoin (USDC-USD), filed to go public in April with plans for a long-awaited IPO. Indeed, the company is hoping for a $5 billion valuation. However, sources cited by Fortune say that Circle has also quietly explored selling itself to either Coinbase (COIN), the largest crypto exchange in the U.S., or Ripple (XRP-USD), a major crypto payments company. Although the IPO is still on track, and no sale has happened yet, one banker said, “If Coinbase wanted to buy them, Circle would sell in a heartbeat.” So far, Circle hasn’t set IPO terms or started its investor roadshow.

Circle and Coinbase already have a close relationship. In fact, they co-founded Centre Consortium in 2018 to launch USDC. That partnership ended in 2023, but Coinbase still owns a piece of Circle. The two companies also split revenue from interest earned on the reserves backing USDC. Normally, each gets 50%, but Coinbase gets 100% of the revenue if the USDC is stored on its platform. Coinbase also has some control over Circle’s operations, including a say in major partnerships and shared rights to Circle’s intellectual property if the company runs into financial trouble. This gives Coinbase a strong position and makes it a likely buyer.

Ripple also made a bid to buy Circle for $4-$5 billion, but Circle rejected the offer for being too low. Interestingly, Ripple holds over $100 billion worth of its XRP token, with about $11.77 billion available now and $95 billion locked in escrow, which it could use in a deal, along with cash. Coinbase, by comparison, had $8 billion in cash as of March and, as a public company, can raise more money if needed. CEO Brian Armstrong said Coinbase is always open to deals, but there’s nothing official to announce yet. Both Coinbase and Ripple have been buying companies recently, and the IPO market may be starting to recover, which could boost Circle’s confidence in going public.

Is COIN Stock a Buy, Sell, or Hold?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on COIN stock based on 11 Buys, 11 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average COIN price target of $261.50 per share implies 1.9% downside risk.

See more COIN analyst ratings