London, 2 August 2021 – Square Inc., the payments firm led by Twitter Inc.’s founder, Jack Dorsey, is leading its largest-ever acquisition as it agrees to buy the Australian Buy Now, Pay Later company Afterpay Ltd. for $29 billion.
The takeover is a ‘proof of concept’ moment for Buy Now, Pay Later – the business model that has upended consumer credit by charging merchants a fee to offer small point-of-sale loans which their shoppers repay in interest-free installments, bypassing credit checks.
The all-stock buyout values Afterpay’s shares at A$126.21, a 31% jump from Friday’s closing price of A$96.66.
The offer means that each of Afterpay’s founders, Anthony Eisen and Nick Molnar, would pocket A$2.46 billion. China’s Tencent Holdings Ltd., which paid A$300 million for 5% of Afterpay in 2020, would also make A$1.7 billion in earnings.
Square’s move to venture into Buy Now, Pay Later territory, is one that comes amidst a shift away from traditional credit, particularly seen among younger consumers. Square’s plan would be to integrate Afterpay into both its consumer Cash App, and its Seller product for small businesses, Square’s Chief Financial Officer Amrita Ahuja said in an interview.
“Square and Afterpay have a shared purpose … We built our business to make the financial system more fair, accessible and inclusive,” said Square’s founder Jack Dorsey.
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