Square Inc (NYSE: SQ) said on Monday it wants to expand its footprint in the booming ‘buy now, pay later’ space. To that end, it plans on acquiring Australian fintech firm Afterpay Limited (ASX: APT). Shares of Square were close to 1.0% up on Monday morning.
Square said it will buy the Melbourne-headquartered company for $29 billion in stock that translates to an about 30% premium on the price at which Afterpay closed the regular session on Friday.
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“Square and Afterpay have a shared purpose. 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,†Square CEO Jack Dorsey said in a statement.
The deal is expected to close in Q1 of 2022
Following the announcement on Sunday evening, Afterpay jumped 19% in the stock market today. The Australian company’s board has unanimously recommended the offer to shareholders that are yet to vote. If the deal moves ahead, Afterpay shareholders will own roughly 18.5% of the joint company.
According to Square, after completion of the transaction that is expected in Q1 of 2022, Afterpay will become a part of its seller and Cash App ecosystems. The news comes only weeks after Square launched its new banking services for small businesses.
Square reported Q2 financial results
Square also said on Sunday that its gross profit in the second quarter jumped 91% on an annualised basis, marking the highest quarterly growth rate since its inception. Net revenue climbed by 87%, and profit from the seller and Cash App came in at 85% and 94% higher, respectively.
Square’s Cash App that competes with PayPal’s Venmo, now has a user base of 40 million. Another 16 million will be brought in by Afterpay post completion of the deal, which will see Square have a secondary listing as well, said CNBC’s Will Koulouris on “Street Signs Asiaâ€.
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