Square will pay $29 billion in shares to purchase Australian fintech business Afterpay, with the deal expected to finish in Q1 2022.
By acquiring a big Australian loan company, Jack Dorsey’s cryptocurrency-friendly digital payments firm, Square is increasing competition with global payment heavyweights like PayPal.
Square stated on Sunday that it had signed a scheme implementation deed for a $29 billion deal to buy all of the issued shares in fintech business Afterpay. The transaction will be paid in all stock in the first quarter of 2022, based on the closing price of the Square common share.
Square will accelerate its strategic goals for payment ecosystems as a result of the acquisition, as the firm wants to incorporate Afterpay into its Seller and Cash App business divisions to provide a “buy now, pay later” (BNPL) solution.
BNPL transactions, also known as installment loans, let customers pay a bill in small installments over a certain period and were pioneered by global financial institutions such as PayPal, Mastercard, Klarna, Citi, etc.
According to the statement, the integration will allow small companies to provide BNPL at checkout, allowing Afterpay customers to manage their installment payments directly in Cash App and discover BNPL offers immediately within the app. As a result, Square has reached a new milestone in addressing growing consumer demand for alternatives to traditional credit.
According to Square co-founder and CEO Dorsey, the acquisition would help the firms achieve their common goal of making the financial system more open, fair, and inclusive.
“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,”he noted.
Afterpay’s co-founders and senior executives will join Square as part of the deal and will assist manage the company’s associated merchant and consumer businesses within Square’s Seller and Cash App ecosystems. Square has also agreed to open a secondary listing on the Australian Securities Exchange (ASX), allowing Afterpay shareholders to trade Square shares on the ASX through CHESS depositary interests.
Square recently announced significant second-quarter earnings, including a 200 percent increase in Bitcoin (BTC) sales. In addition, Square’s Bitcoin services made a gross profit of $55 million, up 223 percent year over year, while Cash App made a gross profit of $546 million, up 94 percent.