Square agrees to acquire Afterpay for $29 billion in all-stock deal
Australian installment-payment company positions its service as a cheaper, more responsible alternative to a credit card
How big tech companies are responding to the market
'Barron's Roundtable' associate editor Eric Savitz joins 'Barron's Roundtable' to discuss: 'they are throwing money at the cloud'
Square Inc. has agreed to an all-stock deal valued at around $29 billion to acquire Australia’s Afterpay Ltd., an installment-payment company that positions its service as a cheaper and more responsible alternative to a credit card.
Ticker | Security | Last | Change | Change % |
---|---|---|---|---|
SQ | BLOCK INC. | 64.58 | +0.50 | +0.78% |
Square said it plans to integrate Afterpay into its Seller and Cash App business units, which would allow more retailers to offer so-called buy now, pay later services at checkout.
JULY JOBS REPORT, GM, CVS EARNINGS AND INFRASTRUCTURE TALKS TOP WEEK AHEAD
Afterpay’s technology allows users to pay for goods in four interest-free installments, while receiving the goods immediately. Customers pay a fee only if they miss an automated payment, a transgression that also locks their account until the balance is repaid. Afterpay says this limits bad debts, particularly in a downturn when job security is shaky and household finances are stretched.
Most of Afterpay’s revenue comes from retail merchants, which pay a percentage of the value of each order placed by customers, plus a fixed fee. The company is expanding across the U.S. through deals with retailers including Anthropologie and Free People.
"Square and Afterpay have a shared purpose," said Jack Dorsey, Square’s chief executive. "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."
CLICK HERE TO READ MORE ON FOX BUSINESS
Afterpay, Australia’s largest tech company by market capitalization, said the deal implies a value of around 126.21 Australian dollars (about US$92.66) for each of its shares, representing a 31% premium to its closing price on Friday.
Afterpay said its shareholders will receive 0.375 share of Square Class A common stock for each Afterpay share that they own. It expects Afterpay shareholders will own around 18.5% of the combined company when the deal completes.
Click here to read more on the Wall Street Journal.