Square buys Afterpay for $ 29 billion as a “buy now, pay later” boom

Square Inc Update

Settlement firm Square has signed an agreement to buy Australia’s “buy now, pay later” provider Afterpay for $ 29 billion in all-stock transactions, Australia’s largest acquisition in history.

Square, whose CEO Jack Dorsey is also Twitter CEO, offers Afterpay shareholders 0.375 shares of Square per share. This is a 30% premium based on the latest closing prices of both companies.

Based in Melbourne Afterpay Retailers can offer their customers the option of paying their products in four installments without interest if payments are made on time.

The size of the transaction will exceed the record set by Acquisition of Unibail-Rodamco Shopping center group Westfield with a corporate value of $ 24.7 billion in 2017.

The transaction, announced in a joint statement by the two companies on Monday, is expected to close in the first quarter of 2022.

According to Afterpay, 16 million users consider the service to be a more responsible debit than using a credit card. The merchant pays Afterpay a fixed fee and a percentage of each order.

The deal underscores the great desire to buy now and pay the provider later. Has grown rapidly During the coronavirus pandemic.

“Square and afterpay have a common purpose,” Dorsey said. “We built our business to make our financial system fairer, more accessible and more comprehensive. Afterpay has built a credible brand that follows these principles.”

Recruitment Buy now and pay for service later By the beginning of the year, it had tripled in volume compared to pre-pandemic data, especially popular with young consumers, according to Adobe Analytics data.

Rival afterpay is from Sweden ClarnaDoubled its valuation to $ 45.6 billion in three months after receiving an investment from SoftBank Vision Fund 2 in June. PayPal offers its own service, Payin 4, but last month it was reported that Apple was partnering with Goldman Sachs to buy now and later pay Apple Pay users.

Afterpay investor Ophir Asset Management’s portfolio manager Steven Ng said the deal could validate the acquisition, pay for a later business model and trigger a merger in the sector. rice field. “Given our partnership with Square, we could start a round of integration with other payment providers, where buying now and paying later would be another payment method offered to our customers,” he said. Told.

Over the past two years, afterpay has grown rapidly in the United States and Europe, now accounting for more than three-quarters of 16.3 million active customers and one-third of merchants on the platform. According to Afterpay, the service is used in more than 100,000 merchants in the United States, Australia, Canada, New Zealand, and the United Kingdom, France, Italy and Spain, known as Clearpay.

Square will provide this feature to merchants and users of Cash App, a fast money transfer service popular with small businesses and PayPal’s Venmo competitors.

“This is a high-priced purchase, but the market for buying now and paying later is growing very rapidly, and it makes a lot of sense for Square to invest firmly,” said retail analyst Neil.・ Sanders says.

“For some, especially the younger generation, buying now and paying later is a good form of credit. Afterpay has already had some success with its expansion in the United States, but Square is a platform. It can be accelerated by integrating it into the payment infrastructure, which is probably one of the relatively high price justifications for this transaction. “

Square processed $ 42.8 billion in payments in the second quarter, with Cash App transactions accounting for about 10%, according to figures released on Sunday. The company made $ 204 million in revenue with $ 4.7 billion in revenue.

Afterpay’s shareholders will own approximately 18.5 percent of Square when the acquisition is complete, the two companies said. The transaction was approved by the boards of directors of both companies, but it also requires the support of Afterpay shareholders.

As part of the transaction, Square will establish a secondary listing on the Australian Stock Exchange, giving Afterpay shareholders the option to receive Square shares listed on the New York Stock Exchange or ASX. Square may choose to pay 1% of the purchase price in cash.

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Square buys Afterpay for $ 29 billion as a “buy now, pay later” boom

Source link Square buys Afterpay for $ 29 billion as a “buy now, pay later” boom

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