Square buys Afterpay in a A$39 billion deal
Australian ASX listed buy-now-pay-later (BNPL) company Afterpay has been acquired by US fintech Square.
According to a release published by Square today, the transaction is worth $39 billion and is expected to be paid in all stock. The Australian Financial Review reported that is the largest M&A deal in Australian history.
For shareholders, this means they will receive a fixed exchange ratio of 0.375 shares of Square class A stock for each Afterpay ordinary share they hold. Based on Square’s closing price (US$247.26 on July 30, 2021) this represents approximately A$126.21.
Afterpay is an Australian fintech company started by Anthony Eisen and Nick Molnar, who will join Square upon completion of the transaction. It serves more than 16 million consumers and nearly 100,000 merchants globally, including major retailers across key verticals such as fashion, homewares, beauty, sporting goods and more.
Square was co-founded by prominent entrepreneur and CEO of Twitter Jack Dorsey. It is a payment company that goes beyond its notable POS readers. This deal is a strategic move for Square who plans to integrate BNPL into its B2B ecosystem to drive long-term growth.
“Square and Afterpay have a shared purpose. We built our business to make the financial system more fair, accessible and inclusive, and Afterpay has built a trusted brand aligned with those principles,” said Dorsey.
As a result of the deal, businesses of all sizes who work with Square will have the ability to offer BNPL at checkout and Afterpay consumers will be able to manage their payment installments directly in Square’s own ‘Cash App’.
“BNPL has been a powerful growth tool for sellers globally,” said Alyssa Henry, lead of Square’s seller business. “We are thrilled to not only add this product to our Seller ecosystem, but to do it with a trusted and innovative team.”
The joining of the complementary fintechs hopes to aid in discovery, as customers will find new merchants when the Afterpay App is integrated into Cash App. Similarly, Afterpay will be able to reach Square’s large and growing customer base of more than 70 million annual transacting active Cash App customers and millions of sellers.
“The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world,” said Eisen and Molnar. “It also provides our shareholders with the opportunity to be a part of future growth of an innovative company aligned with our vision.”
Square buying Afterpay in all stock is the ultimate demonstration of how buy now pay later works
— Mengxi Lu (@mengxilu) August 1, 2021
Found this article interesting? Read this interview with Jess Cook, the head of marketing at Square Australia, who reflected on how her team helped businesses navigate the ongoing challenges of COVID-19.