US payments company Square is seeking to acquire Australian buy now, pay later (BNPL) service provider Afterpay for about US$29 billion, or A$39 billion, in a deal backed by Afterpay's board.
Afterpay shareholders would be paid in Square shares. Regulatory approvals required for the deal include one from New Zealand's Overseas Investment Office. Afterpay operates in NZ, Square currently doesn't.
The deal would enable the San Franciso-based Square, whose co-founder and CEO is Twitter co-founder Jack Dorsey, to expand into consumer lending.
Square's products include CashApp,which allows users to send and receive money for free through a mobile application, and Square Point-of-Sale, a free application that lets merchants process payments via smartphone.
BNPL services allow consumers to purchase and obtain goods and services in-store or online immediately, but pay through installments over time.
While there are no interest charges, there are penalty fees for late payments. You can see details on all New Zealand's buy now, pay later service providers here.
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Square says it plans to integrate Afterpay into its existing Seller and Cash App business units, enabling "even the smallest" of merchants to offer BNPL services. Afterpay's co-founders and co-CEOs, Anthony Eisen and Nick Molnar, will join Square assuming the deal is completed.
Based on Square's July 30 closing share price, the deal values Afterpay at about A$126.21 per share, a premium of 31% to Afterpay's last closing price of A$96.66. The deal is structured as a Scheme of Arrangement, and is expected to close in the first quarter of 2022. Around midday Australian Eastern Standard Time, Afterpay's shares were up almost 24% at A$119.760.