Square today announced that it has acquired Afterpay, an Australian buy-now, pay-later company, in a massive $29 billion stock deal.
The purchase price is based on the closing price of Square common stock on July 30, which was $247.26. The closing of the transaction will take place in the first quarter 2022. However, certain conditions must be met. Afterpay is valued at a more than 30% premium over its closing price, A$96.66.
Jack Dorsey, Square’s cofounder and CEO stated in a statement the fintech giants have “a common purpose.”
In the statement, he stated that Afterpay was built to improve the accessibility and fairness of the financial system. We can connect the Cash App and Seller ecosystems better to provide more appealing products and services to consumers and merchants. This puts power back in our hands.
Combining the companies will create an unrivalled payments company. The buy now and pay later market has seen a significant increase in the last 18 months. This appeals especially to young generations who are drawn to the option of using installment loans instead of credit cards and paying interest.
Afterpay was used by more than 16,000,000 consumers worldwide and close to 100,000 merchants as of June 30. This includes major retailers in fashion, homewares and beauty, and sports goods.
According to the statement, Afterpay will be “accelerate Square’s strategic priorities” in its Cash App and Seller ecosystems. Square will integrate Afterpay in its Cash App and Seller business units so even the smallest merchants can sell buy-now, pay-later at checkout. Afterpay customers will be able to use Cash App directly to make installment payments. Customers of Cash App will now be able find merchants, buy now and pay later (BNPL), offers right within the app.
Afterpay co-founders, and co-CEOs Nick Molnar and Anthony Eisen will be joining Square to help manage Afterpay’s merchant and consumer business. Square announced that it would appoint an Afterpay director as its chairman.
Afterpay shareholders will receive 0.375 Square Class A shares for each share. According to Square, this implies that each share will be worth approximately A$126.21.
Is there more consolidation? It remains to be seen. Twitter buzzes about the next deals. Here in the U.S., rival Affirm (founded by PayPal co-founder Max Levchin) went public earlier this year. On July 30, shares closed at $56.32, significantly lower than its opening price and 52-week-high of $146.90. Meanwhile, European competitor Klarna — which is growing rapidly in the U.S. — in June raised another $639 million at a staggering post-money valuation of $45.6 billion.
This deal is certain to intensify the BNPL battle for American consumers.
Publié Mon, 02/02/2021 at 00:26.06 +0000