Twitter founder Jack Dorsey’s digital payments platform Square has agreed to fully acquire Australian buy now, pay later (BNPL) firm Afterpay in a share-swap deal that values the latter at A$39bn (US$29bn).
The deal values Afterpay’s shares at A$126.21, a 31% premium to Afterpay’s last closing price, according to a statement by both the companies. When completed, Square’s buyout of the firm will be the largest ever in Australia. After the completion of the deal, Afterpay shareholders will own 18.5% of the combined company.
Through the Australian firm's expertise in the BNPL services, Square will be able to integrate and offer BNPL to the merchants on its platforms, increase the usage of its Cash App to help Afterpay customers manage their installments and allow customers to search directly for BNPL offers.
“Square and Afterpay have a shared purpose…Together we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers,” said Jack Dorsey, co-founder and chief executive of Square in a statement.
For Afterpay, the deal offers access to the large US market. “The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world,” said Anthony Eisen and Nick Molnar, Afterpay co-founders and co-chief executives, in a statement.
Afterpay’s share’s soared after the announcement and was 23.6% higher than the previous close at A$119.53 during morning trade on the Australian Stock Exchange.
Buy now, pay later booms
The deal comes at a time when the BNPL business is booming. According to a research from US-based payments processing firm Worldpay, BNPL had a 2.1% share in global e-commerce spends in 2020 and expects it to increase to 4.2% by 2024. The boom has even prompted tech major Apple to draw up plans for entering the sector.