PayPal plans to acquire shopping and deal-hunting platform Honey for $4 billion, its largest acquisition to date.

• PayPal announced that it will buy shopping and rewards platform Honey for $4 billion, its largest acquisition to date.
• Buying Honey allows PayPal to establish a foothold in a new area of the market.
• PayPal's stock price dropped more than 2% in extended trading after the announcement.
• Visit Business Insider's homepage for more stories.

Online payments giant PayPal announced Wednesday that it plans to buy Honey, a company that makes browser add-ons for its customers, for $4 billion. The acquisition, which is PayPal's biggest acquisition to date, is part of the company's push to broaden its reach beyond the payments industry.

Honey, an LA-based company founded in 2012, tracks prices, alerts and manages rewards programs. The company makes browser add-ones and mobile applications to alert customers. PayPal said Honey currently hunts deals across 30,000 online retailers.

The acquisition is expected to allow PayPal to help its network of 24 million merchants attract shoppers earlier in the deal-hunting process.

Although PayPal CEO Dan Schulman described as the move as a "transformative acquisition," Wall Street seemed less enthused: PayPal's stock price dropped more than 2 percent in after-hours trading following the announcement.

Honey was profitable on a net income basis in 2018, PayPal said in the announcement. But it suggested that the deal would weigh on PayPal's profitability in the short term, noting that Honey was expected to be "accretive to PayPal's non-GAAP earnings per share in 2021."

PayPal, which has a $122 billion market cap, did not specify in its announcement whether the acquisition was being financed with cash or stock. PayPal had just over $10 billion in cash and short-term investments on its balance sheet as of September 30.

The deal is expected to close in the first quarter of 2020, pending regulatory approval.

While PayPal hasn't had any other major acquisitions this year, the announcement to acquire Honey follows a string of deals last year that include Hyperwallet, IZettle and Simility.

PayPal also has two other major projects in the pipeline - moving into China via its acquisition of GoPay and an upcoming Venmo credit card - that could boost its performance.