Square acquired Afterpay for US$29 billion because of the boom in “buy now, pay later”

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Square Inc updates

Payment company Square has reached an agreement to acquire Australia”Buy now, pay laterProvider Afterpay trades in all stocks worth approximately US$29 billion.

According to a joint statement issued on Sunday, Afterpay shareholders will receive 0.375 Square shares for each share held, which is a 30% premium to the recent closing prices of the two companies.

The transaction is expected to be completed in the first quarter of 2022. The transaction will be the largest in Australian history, surpassing Unibail-Rodamco’s acquisition of shopping mall group Westfield for US$20 billion in 2017.

Melbourne-based Afterpay allows retailers to provide customers with the option of paying in four installments, and if the payment is made on time, no interest is required.

The company said that its 16 million users believe this option is a more responsible lending method than using traditional credit cards. The merchant pays a fixed fee for the service provided to Afterpay, as well as a certain percentage of each order.

This transaction highlights the huge demand for buy-and-pay-before-supplied suppliers who have been very popular during the pandemic.

According to data from Adobe Analytics, by the beginning of 2021, compared with before the pandemic, the use of buy-and-pay has tripled, which is especially popular with young consumers.

It is Sweden’s that competes with Afterpay in this industry KranaAfter receiving an investment from SoftBank Vision Fund 2 in June, the company’s valuation doubled in just three months to $45.6 billion. PayPal provides its own “Pay in 4” service, and last month it was reported that Apple is seeking to cooperate with Goldman Sachs to provide Apple Pay users with the convenience of buying first and paying later.

Afterpay said it is used by more than 100,000 merchants in Australia, the United States, Canada, New Zealand, and the United Kingdom, France, Italy, and Spain, where it is called Clearpay.

square It intends to provide this facility to merchants and users of its Cash App, a fast money transfer service popular with small businesses and a competitor of PayPal Venmo.

Retail analyst Neil Sanders said: “This is an expensive purchase, but the’buy first, pay later’ market is growing very fast, and Square’s large shareholding is very meaningful.”

“For some people, especially the younger generation,’buy first, pay later’ is a popular form of credit. Afterpay has already achieved some success in its US expansion, but Square will be able to integrate it into its platform and Payment infrastructure to accelerate this process-this may be one of the reasons for the relatively high transaction price.”

According to data released on Sunday, Square processed $42.8 billion in payments in the second quarter of this year, of which Cash App transactions accounted for about 10%. The company reported total revenue of US$4.7 billion and total profit of US$204 million.

“Square and Afterpay share a common goal,” said Jack Dorsey, Square CEO. “We built our business to make the financial system more fair, accessible and inclusive, and Afterpay has built a trustworthy brand that complies with these principles.”

“Together, we can better connect our Cash App and the seller ecosystem, provide merchants and consumers with more attractive products and services, and let them regain power.”

The two companies said that once completed, Afterpay shareholders will own approximately 18.5% of Square. The transaction has been approved by the boards of directors of the two companies, but needs the support of Afterpay shareholders.

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

“By merging with Square, we will further accelerate our growth in the U.S. and globally, provide access to new categories of physical merchants, and provide our merchants and consumers with a wider range of new and valuable capabilities and services. “Said Afterpay’s co-founders and co-CEOs Anthony Eisen and Nick Molnar.

“We are fully in line with Square’s mission, and together we hope to continue to redefine financial health and responsible spending for our customers.”

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