Circle Seeks $5B Valuation in Coinbase, Ripple Acquisition Talks

Circle Internet Financial, the issuer of the USDC stablecoin, is reportedly in discussions with Coinbase and Ripple regarding potential acquisition offers. The company is seeking a valuation of at least $5 billion for these talks, which are described as informal takeover negotiations. This development comes as Circle is also preparing for a potential initial public offering (IPO), with a similar valuation target.

Ripple had previously made an offer to acquire Circle, with a valuation ranging from $4 billion to $5 billion. However, Circle rejected this offer, deeming it undervalued. The proposed deal from Ripple likely included a significant portion of the payment in XRP tokens, which may have been heavily discounted by Circle, given its preparation for a traditional IPO. This discount could have made the effective value of Ripple’s offer fall below Circle’s minimum threshold of $5 billion.

Circle may have set its firm floor at $5 billion, leaving little room for compromise. It is possible that Ripple’s bid was lower than its stated range or had terms that made it less attractive. Even if Ripple matched the price, Circle might prefer a sale to Coinbase due to their deep operational and commercial ties. These ties include shared USDC revenue and a history of governance collaboration. Coinbase recently reached a $2.9 billion deal to acquire Deribit, a move expected to strengthen the firm’s position in the crypto options market. In a statement following the landmark deal, Coinbase CEO Brian Armstrong revealed that the company is still open to further acquisitions. Armstrong said Coinbase is consistently on the lookout for M&A opportunities, particularly with like-minded international firms that could accelerate its product development and growth. When asked if Circle might be considered, Armstrong neither confirmed nor denied, stating there was “nothing to announce” at the time.

Circle's exploration of a potential sale to either Coinbase or Ripple indicates its flexibility to stay independent via an IPO. The company is said to be seeking at least $5 billion, which is the valuation that it's targeting for its IPO. This strategic move allows Circle to maintain its independence while also considering lucrative acquisition offers from major players in the crypto industry. The company's decision to explore these options reflects its commitment to achieving significant financial growth and operational stability.