Square has reached a Scheme Implementation Deed to acquire Australian buy now, pay later (BNPL) platform Afterpay for an implied value of around $29bn.
Under the terms of the transaction deed, Afterpay shareholders will receive 0.375 shares of Square Class A common stock for each Afterpay ordinary share held.
Square holds an option to pay 1% of the total consideration in cash.
The transaction, which has been approved by the boards of directors of both companies, is expected to close in the first quarter of 2022, subject to certain closing conditions.
Upon closing of the transaction, Afterpay co-founders and co-CEOs will join Square and assist in leading Afterpay’s respective merchant and consumer businesses.
Also, Square would appoint one Afterpay director as a member of its board of directors.
Square co-founder and CEO Jack Dorsey said: “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.
“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.”
Afterpay serves more than 16 million consumers and nearly 100,000 merchants, including major fashion, homewares, beauty, sporting goods and other retailers.
Square intends to integrate Afterpay into its existing Seller and Cash App business units.
The integration will enable merchants of all sizes to offer BNPL at checkout, and Afterpay consumers with the capability to manage their instalment payments directly in Cash App.
Square said that BNPL attracts consumers, whose preferences are shifting away from the traditional credit, and merchants who are looking for new ways to grow their sales.
With the acquisition, the company is expected to benefit from Afterpay’s merchant base, which will help advance its expansion into new regions, and acquisition of new sellers.
Afterpay is expected to benefit from Square’s large and growing customer base of more than 70 million annual transacting active Cash App customers and millions of sellers.
Also, Afterpay consumers will be enabled to use the money transfer, stock and Bitcoin purchases, Cash Boost and other financial tools on Cash App.
Afterpay co-founder and CEO Anthony Eisen said: “By combining with Square, we will further accelerate our growth in the US and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable capabilities and services to our merchants and consumers.
“We are fully aligned with Square’s purpose and, together, we hope to continue redefining financial wellness and responsible spending for our customers.
“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.”
