Square to buy Australia's Afterpay for $39 billion

Mobile payments giant Square has snapped up Australia’s Afterpay for approximately $39 billion.

In a statement, the two fintechs said that all shares of Afterpay would be acquired via a “court-approved scheme of arrangement.”

“The transaction has an implied value of approximately US$29 billion (A$39 billion) based on the closing price of Square common stock on July 30, 2021, and is expected to be paid in all stock,” the two firms said.

The transaction is expected to close in the first quarter of calendar year 2022, subject to the satisfaction of certain closing conditions.

Afterpay is a pioneer of the 'buy now, pay later' (BNPL) phenomenon.

Its co-CEOs Anthony Eisen and Nick Molnar said the transaction “marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world.” 

“It also provides our shareholders with the opportunity to be a part of future growth of an innovative company aligned with our vision,” the pair said.

Molnar commented further on his LinkedIn, calling the acquisition "a really significant moment for the Australian tech sector, which we believe will further connect our emerging tech sector to Silicon Valley."

"It’s amazing to see Australian innovation and entrepreneurship recognised on this global level," he wrote.

"Anthony Eisen and I could not be more proud of this moment or more grateful to our customers, merchants, team, board members and shareholders who helped us get to today. 

"We look forward to this team being part of the future growth of a remarkable company aligned to our vision of providing fairness and financial freedom for all."

Square CEO and co-founder Jack Dorsey said the two fintechs “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 said it plans to enable “even the smallest of merchants to offer BNPL at checkout, give Afterpay consumers the ability to manage their installment payments directly in Cash App, and give Cash App customers the ability to discover merchants and BNPL offers directly within the app.”

Afterpay serves more than 16 million consumers and nearly 100,000 merchants globally.

The Australian fintech said its buyout would bring “added value, differentiation, and scale.”

“Afterpay will benefit from Square’s large and growing customer base of more than 70 million annual transacting active Cash App customers and millions of sellers, which will expand Afterpay’s reach and growth both online and in-person,” according to a statement.

Afterpay's board "unanimously" recommended that shareholders vote in favour of the bid.

They said it represented a 30.6 percent premium on Afterpay's most recent close price of A$96.66 per share.

Shareholders would receive 0.375 shares of Square Class A common stock for every Afterpay share.

"Square has agreed to establish a secondary listing on the ASX to allow Afterpay shareholders to trade Square shares via CHESS Depositary Interests on the ASX," the two firms said.