Circle Internet Financial Explores Sale to Coinbase or Ripple Ahead of Potential IPO

The issuer of the USDC stablecoin is in initial negotiations for a possible sale, considering negotiations with Coinbase or Ripple.

Circle Financial, the firm behind the USDC stablecoin, is in the early stages of exploring a potential sale and has engaged in initial discussions with Coinbase and Ripple, according to sources linked to banks and private equity firms.

Despite these talks, Circle is continuing with its planned public listing via a traditional IPO, as reported by Bloomberg earlier this year.

The conversations regarding a possible sale are described as informal, and Circle is said to be seeking a minimum valuation of $5 billion. However, a proposal from Ripple, which valued the company at between $4 billion and $5 billion, was rejected by Circle as being too low.

One aspect of the proposal that may have contributed to the valuation differential is the structure of the consideration. A significant portion of Ripple's offer was in XRP tokens, which could have resulted in a substantial discount to market value, especially given Circle's preparation for a public listing.

According to the sources, Circle appears to be holding firm to its valuation floor and has shown no willingness to compromise on that front. Moreover, if both Coinbase and Ripple were to match the valuation and present viable acquisition proposals, Circle might prefer Coinbase due to their existing partnership, revenue sharing through USDC, and aligned governance history.

Coinbase recently announced a $2.9 billion deal to acquire crypto derivatives exchange Deribit, highlighting its interest in expanding through acquisitions. CEO Brian Armstrong has stated that the company is looking for M&A opportunities that would enhance its offerings and accelerate its global growth.

When asked about a potential acquisition of Circle, Armstrong said that there was “nothing to announce” at this time. However, given Coinbase's active involvement in M&A and its interest in expanding its footprint, it wouldn't be surprising to see them pursue an opportunity like this, especially considering the close partnership and potential synergies with Circle.

According to the sources, if Coinbase expressed interest, Circle could quickly accept a proposal. Meanwhile, Circle has filed its IPO application with the SEC but is still assessing the impact of recent U.S. trade policies on their decision to proceed with the IPO.

Several other companies that were planning to debut on the stock exchange, such as Swedish buy now, pay later firm Klarna and ticket resale company StubHub, have decided to postpone their roadshows due to the current macroeconomic uncertainty.