In a hugely successful deal shaking the fintech world, Square announced today that it is acquiring Australian giant Buy Now, Pay then Afterpay in a deal for $ 29 billion in shares.
The purchase price is based on the closing price of Square’s common stock on July 30, which was $ 247.26. The transaction is expected to close in the first quarter of 2022, subject to certain closing conditions. Values Afterpay at more than 30% premium over its last closing price of A $ 96.66.
Square co-founder and CEO Jack Dorsey said in a statement that the two fintech giants “have a shared purpose.”
“We build our business to make the financial system more fair, accessible and inclusive, and Afterpay has built a trusted brand aligned with those principles,” he said in the statement. “Together, we can better connect our Cash App and Seller ecosystems to deliver even more attractive products and services to merchants and consumers, putting the power back in their hands.”
The combination of the two companies would create a payments giant like no other. In the past 18 months, the buy now, pay later space has essentially exploded, especially attracting younger generations drawn to the idea of not using credit cards or paying interest and opting for installment loans, which have become ubiquitous online and in retail. stories.
As of June 30, Afterpay served more than 16 million consumers and nearly 100,000 merchants worldwide, including leading retailers in industries such as fashion, home goods, beauty, and sporting goods, among others.
The addition of Afterpay, according to the companies’ statement, “will accelerate Square’s strategic priorities” for its cash and merchant application ecosystems. Square plans to integrate Afterpay into its existing cash and seller app business units, so that even “the smallest of merchants” can offer to 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 merchants and buy now pay later (BNPL) deals directly within the app.
Afterpay’s co-founders and co-CEOs, Anthony Eisen and Nick Molnar, will join Square upon the closing of the deal and help run Afterpay’s respective consumer and commercial businesses. Square said it will appoint an Afterpay director to its board.
Afterpay shareholders will earn 0.375 shares of Class A shares of Square for each share they own. This implies a price of around A $ 126.21 per share based on Square’s Friday close, according to the companies.
Will there be more consolidation in the space? That remains to be seen, and Twitter is certainly excited about the offers that could be next. Here in the US, Assert Rival went public earlier this year. On July 30, the shares closed at $ 56.32, significantly low than its opening price and 52-week high of $ 146.90. Meanwhile, European competitor Klarna, which is growing rapidly in the US, in June raised another $ 639 million with a staggering after-money valuation of $ 45.6 billion.
To be sure, BNPL’s fight for the American consumer is only heating up with this deal.