In a blockbuster deal that shook the fintech world, Square today announced that it is now acquiring the Australian buyout, the latter to pay giant Afterpay in a $29 billion all-stock deal.
The purchase price is based on the July 30 closing price of Square Common Stock, which was $247.26. Contingent to certain closing conditions, the transaction is expected to close in the first quarter of 2022. This values Afterpay at a premium of over 30% from its latest closing price of A$96.66.
Square co-founder and CEO Jack Dorsey said in a statement that the two fintech giants “have a common purpose.”
“We have built our business to make the financial system more fair, accessible and inclusive, and Afterpay has built a trusted brand along those principles,” he said in the statement. “Together, we can better connect our Cash App and vendor ecosystem to deliver even more engaging products and services for merchants and consumers, putting the power back in their hands.”
The combination of the two companies will create a payments giant unlike any other. In the past 18 months, the Buy Now, Pay Later space has inevitably exploded, particularly appealing to younger generations not to use credit cards or pay interest and opt for installment loans instead. keys, which have become ubiquitous online and in retail. Stores.
As of June 30, Afterpay served more than 16 million consumers and approximately 100,000 merchants worldwide, including major retailers in industries such as fashion, home goods, beauty and sporting goods.
The addition of Afterpay will “accelerate Square’s strategic priorities” for its vendor and Cash app ecosystem, the company’s statement said. Square plans to integrate Afterpay into its existing seller and Cash App business units, so that even “smallest merchants” can buy now, pay later at checkout. The integration will also give Afterpay consumers the ability to manage their installment payments directly in the Cash App. Cash App customers will be able to find and buy Buy, Pay Later (BNPL) merchants directly within the app.
Afterpay co-founders and co-CEOs Anthony Eisen and Nick Molnar will join Square at the close of the deal and help lead Afterpay’s related merchant and consumer businesses. Square said it would appoint an afterpay director to its board.
Afterpay shareholders will receive 0.375 shares of Square Class A stock for each of their shares. That means a price of about $126.21 per share based on Square’s Friday close, according to the companies.
Will there be more strength in space? It remains to be seen, and Twitter is certainly sparking discussions about what the deals could be next. Here in the US, rival Affirm went public earlier this year. On July 30, the stock closed at $56.32, well below its opening price and a 52-week high of $146.90. Meanwhile, European competitor Klarna — which is booming in the US — raised $639 million in June at a staggering post-money valuation of $45.6 billion.
Undoubtedly, with this deal, the battle for BNPL for American consumers is heating up.