Ripple Labs is allegedly considering buying Circle for billions of dollars. But how will Ripple pay for it without hurting the XRP market? Let’s find out as the experts share their opinions on it.
Recently, Dave Weisberger made an interesting point about Ripple Labs and the Circle offer. Ripple Labs owns about 40% of XRP, which is a huge stash, and it is considering buying Circle for $10 to $20 billion.
But if Ripple uses its XRP holdings to help fund that purchase, it would have to sell a huge amount of XRP, about $10 billion worth, from its own treasury. Dave has raised a question: who would buy all that XRP? Besides, dumping so much XRP in the market could hurt its price.
However, attorney Fred Rispoli pushed back on Dave’s point. Based on the prices he is getting offered for his Ripple share on the secondary market, he says that Ripple Labs doesn’t need to sell any XRP tokens to buy Circle. Fred said that Ripple probably cannot buy Circle with all cash without selling XRP, but a mix of cash and debt would make the deal work.
Dave asks how Ripple would get $10 billion in cash without selling XRP. This might work if Circle accepts mostly stock or XRP at full value, but that’s uncertain. Fred says $10 billion in cash is unlikely and too high. If the price is $7-$9 billion, Ripple could use cash, stock, and debt to fund the deal without selling much XRP.
Dave also agreed it was a reasonable analysis. If Ripple buys Circle at a fair price, it will not shake things up too much. But if the price is really high, XRP holders might feel some short-term losses.
However, Circle recently said it’s “not for sale” and rejected offers from Ripple and Coinbase. It is now planning a bigger and pricier IPO, targeting a higher valuation of up to $7.2 billion on a fully diluted basis, as per a report from Reuters.
Circle is all set to go public in New York later this week.
Ripple is reportedly considering a $10–$20B acquisition of Circle, but Circle has denied sale plans and is pursuing an IPO instead.
Circle aims for a $7.2B valuation in its upcoming IPO in New York, rejecting recent acquisition offers from Ripple and Coinbase.
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