Square boldly announced its intention of becoming a leading player in the booming ‘buy now pay later’ BNPL market when it announced that it was buying Australian fintech company Afterpay.
Jack Dorsey’s payments company announced a USD29 billion, all-stock deal, roughly 30% premium to Afterpay’s last closing price.
Square said it has entered into a Scheme Implementation Deed under which it agreed to acquire all issued shares in Afterpay by way of a recommended court-approved Scheme of Arrangement.
The acquisition aims to enable the companies to better deliver financial products and services that expand access to more consumers and drive incremental revenue for merchants of all sizes. The closing of the transaction is expected in the first quarter of calendar year 2022, subject to the satisfaction of closing conditions.
Square’s CEO Dorsey in a statement: “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.
“Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”
Afterpay, the pioneering global BNPL platform, will accelerate Square’s strategic priorities for its Seller and Cash App ecosystems. Square plans to integrate Afterpay into its existing Seller and Cash App business units, enable even the smallest of merchants to offer BNPL at checkout, give Afterpay consumers the ability to manage their instalment payments directly in Cash App, and allow customers the ability to discover merchants and BNPL offers directly within give the Cash App.
“Buy now, pay later 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.”
Afterpay is an industry leader serving 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. Afterpay empowers consumers to access the things they want and need, while allowing them to maintain financial wellness and control. It also assists merchants in growing their businesses by helping to drive repeat purchases, increase average transaction sizes, and provide their buyers with the ability to pay over time.
In a statement, Anthony Eisen and Nick Molnar, Afterpay Co-Founders and Co-CEOs, said: “By combining with Square, we will further accelerate our growth in the US and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable capabilities and services to our merchants and consumers.
“We are fully aligned with Square’s purpose and, together, we hope to continue redefining financial wellness and responsible spending for our customers. The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world.”
Square also announced its second-quarter results. Gross profit increased 91% from a year ago, which marked a record quarterly growth rate. Cash App profit was up 94%, while seller jumped 85% from a year ago. Net revenue, excluding bitcoin, came in at $1.96 billion for the quarter.
