In Australia's Biggest-Ever Buyout, Twitter Head's Firm To Buy Afterpay.

In Australia's Biggest-Ever Buyout, Twitter Head's Firm To Acquire Afterpay

Square is co-founded by Twitter Inc co-founder Jack Dorsey.

Square Inc on Monday said it has agreed to purchase buy now, pay later (BNPL) pioneer Afterpay Ltd to create a global online payments giant, offering a 30% premium in a share-swap deal that is set to be Australia's biggest-ever buyout.

Created in 2014, Afterpay has been the bellwether of the niche no-credit-checks online payments sector that burst into the mainstream last year as more people, especially youngsters, chose to pay in instalments for everyday items during the pandemic.

Burgeoning popularity, quick uptake among users and loose regulation has led to rapid growth in the sector, and has reportedly even driven Apple Inc to plan such a service.

"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 Square and Twitter Inc co-founder Jack Dorsey.

For Afterpay, the deal delivers a large customer base in its main target market, the United States, where its fiscal 2021 sales nearly tripled to A$11.10 billion ($8.15 billion) in constant currency terms.

The deal "looks close to a done deal, in the absence of a superior proposal," Ord Minnett analyst Phillip Chippindale said. "The strategic rationale for the business combination is sound in our view (brings significant scale advantages, including to Square's Seller and Cash app products)."

Afterpay shareholders will get 0.375 shares of Square class A stock for every share they own, implying a price of about A$126.21 per share based on Square's Friday close, the companies said.

Afterpay shares were 26% higher at A$121.55 on Monday trading, but below the implied value of the offer.

BNPL firms lend shoppers instant funds, typically up to a few thousand dollars, which can be paid off in interest free instalments.

As they generally make money from merchant commissions and late fees, not interest payments, they sidestep the legal definition of credit - and credit laws.

That means BNPL providers are not required to run background checks on new accounts, unlike credit card companies, and normally request just an applicant's name, address and birth date. Critics say that makes the system an easier fraud target.

The offer, which comes at a time of frenzied deal-making activity, is a more than 30% premium to Afterpay's last close and the Australian firm's shareholders are expected to own about 18.5% of the combined company.

Afterpay's board has unanimously recommended the deal to its shareholders, the company said in the joint statement.

Afterpay co-founders Anthony Eisen and Nick Molnar will join Square, which will appoint one Afterpay director to its board after the deal.

The U.S. company said it will undertake a secondary listing on the Australian Securities Exchange to allow Afterpay shareholders to trade in shares via CHESS depositary interests (CDIs).

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

NDTV News

NDTV.com provides latest news from India and the world. Get today’s news headlines from Business, Technology, Bollywood, Cricket, videos, photos, live news coverage and exclusive breaking news from India.

https://www.ndtv.com/

Related news

France's Sanofi Halts Work On mRNA COVID-19 Vaccine.

French pharmaceutical giant Sanofi said Tuesday it was stopping work on an mRNA vaccine against Covid-19 despite positive test results as it lags behind rivals on producing a coronavirus shot.

NDTV News

Polls unclear as Germans vote for change

Polls unclear as Germans vote for change

As Angela Merkel bows out, the race to succeed her remains unclear with just hours left to run in the national election poll. SUBSCRIBE to our YouTube channel for more videos: Follow us on Twitter: Like us on Facebook: Follow us on Instagram: For ...

In Full: Trevor Phillips On Sunday

In Full: Trevor Phillips On Sunday

Trevor Phillips talks to Angela Rayner and Transport Secretary Grant Shapps on the visa relaxation agreed for drivers following supply concerns and warnings across business. Other guests in Brighton for Labour Conference includes Labour MP John Mc...

UK to hire to foreign truck drivers amid Brexit supply shortages - DW News.

UK to hire to foreign truck drivers amid Brexit supply shortages - DW News.

Britain says it will issue thousands of emergency visas to foreign truck drivers to help ease supply chain problems that have led to fuel rationing and empty shelves at supermarkets. In the aftermath of Brexit, thousands of foreign drivers left th...

VA mom goes viral for confronting school board over explicit books.

VA mom goes viral for confronting school board over explicit books.

Stacy Langton, a mother of six, raises questions about who decides what books are approved for public school libraries. #FoxNews Subscribe to Fox News! Watch more Fox News Video: Watch Fox News Channel Live: FOX News Channel (FNC) is a 24-hour all...

1 1167

Sky News Breakfast: Anthony Joshua loses his belts

Sky News Breakfast: Anthony Joshua loses his belts

On Sunday 26th September: - Visa rules set to change to allow HGV drivers from the EU to enter the UK until Christmas - Boxer Anthony Joshua unexpectedly loses his bout with opponent Oleksandr Usyk - And marathon runner Ella Rothwell on her mammot...

La Palma volcano opens new vent, threatens to collapse - DW News.

La Palma volcano opens new vent, threatens to collapse - DW News.

Eruptions from a volcano on the Spanish island of La Palma have intensified, with a new vent opening up, releasing more lava. More than 400 homes have been destroyed so far. Ash and dust from the new fissure have forced the island's authorities to...

1 515