At a Glance
Square, a payments software firm, has bought Afterpay, an Australian “buy now, pay later” (BNPL) startup, for $29 million. Square’s existing Seller and Cash App business divisions will be linked with Afterpay, allowing even the “smallest of businesses” to accept BNPL.
The acquisition price is based on Square’s common stock closing price of $247.26 on July 30. The deal is scheduled to conclude in the first quarter of 2022, depending on certain closing conditions. It is worth more than 30% more than Afterpay’s most recent closing price of A$96.66.
In a statement, Square co-founder and CEO Jack Dorsey said the two financial companies have similar goals.
He said, “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. Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”
According to the businesses’ announcement, the integration of Afterpay would “accelerate Square’s strategic goals” for its Seller and Cash App ecosystems. Square intends to incorporate Afterpay into its existing Seller and Cash App business divisions, allowing even the “tiniest of merchants” to provide BNPL at checkout.
Customers using Afterpay will manage their installment payments directly in Cash App, thanks to the integration. Customers using the Cash App will be able to search for merchants, and BNPL deals right within the app.
Anthony Eisen and Nick Molnar, co-founders and co-CEOs of Afterpay, will join Square once the acquisition closes and oversee Afterpay’s merchant and consumer operations. Square has announced that it would appoint one Afterpay director to its board of directors.
Afterpay shareholders will get 0.375 shares of Square Class A stock for each share they possess. According to the firms, this translates to roughly A$126.21 per share based on Square’s Friday closing.
Afterpay has over 16 million customers and over 100,000 merchants worldwide, including major shops in fashion, homewares, cosmetics, and sporting goods, among other areas.