Two of the fastest growing fintech companies worldwide will be merged and will continue their joint mission in connection with economic strengthening and financial inclusiveness
Square, Inc., and Afterpay Limited announced that they have entered into a deed implementing agreement under which Square has agreed to all through a recommended and court-approved settlement agreement buy up issued shares of Afterpay. The transaction has an implied value of approximately $ 29 billion (A $ 39 billion) based on the closing price of Square’s common stock as of July 30, 2021 and is expected to be settled in full in shares. The acquisition is designed to better enable companies to offer compelling financial products and services that reach more consumers and generate additional revenue for merchants of all sizes.
“Afterpay will deepen and strengthen the connections between our seller and cash app systems and enable us more quickly to offer cash app customers a wide range of commercial opportunities.”
“Square and Afterpay have a common goal. We built our business to make finance fairer, more accessible and more inclusive, and Afterpay has built a brand of trust that aligns with those tenets, ”said Jack Dorsey, Co-Founder and CEO of Square. “Together we can better link our seller and cash app systems to offer merchants and consumers even more compelling products and services that put more power in their hands.”
With Afterpay, the groundbreaking BNPL (“buy now, pay later”) platform, Square’s strategic priorities are implemented faster in its seller and cash app systems. Square plans to integrate Afterpay into its existing seller and cash app businesses, enabling even the smallest merchants to offer BNPL at the checkout, and Afterpay customers the ability to manage their installment payments directly in the Cash App and the Cash App -Customers in turn the ability to discover dealers and BNPL offers directly in the app.
“Buy now, pay later is a powerful tool that is helping sellers around the world grow more,” said Alyssa Henry, Square’s sales director. “We are delighted to be able to add this product to our vendor system with a trusted and innovative team.”
“The addition of Afterpay to Cash App will further empower our fast-growing consumer networks around the world and provide consumers with flexible and responsible payment options,” said Brian Grassadonia, Head of Cash App Business at Square. “Afterpay will deepen and strengthen the connections between our seller and cash app systems and enable us more quickly to offer cash app customers a wide range of commercial opportunities.”
Afterpay is an industry leader with a world class product and a strong cultural affinity with Square. As of June 30, 2021, Afterpay serves more than 16 million consumers and almost 100,000 merchants worldwide, including large retail stores in important industries such as fashion, housewares, cosmetics, sporting goods, etc. Afterpay gives consumers access to the things they want and need, and allows them to stay financially healthy and to keep their finances under control. In addition, Afterpay helps merchants to expand their business by attracting regular customers, increasing the average transaction amounts and offering buyers the option of paying in installments.
“By joining forces with Square, we will further accelerate our growth in the US and worldwide, provide access to a new category of non-virtual retailers, and provide our retailers and consumers with a broader platform of new and valuable opportunities and services. Our objectives are completely in line with Square’s, and together we can hopefully continue to maintain financial health and responsible spending for our customers, ”said Anthony Eisen and Nick Molnar, the co-founders and CEOs of Afterpay. “The transaction represents a major recognition of the Australian technology sector as our domestic innovations continue to gain acceptance around the world. Our shareholders are also given the opportunity
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For Square, BNPL represents an attractive opportunity, in line with changing consumer habits, with younger consumers in particular turning away from traditional loans, as well as the continued demand from retailers for new ways to increase sales and the global growth of omnichannel retail. Together, the mutually complementary business units of Square and Afterpay receive growth opportunities on several strategic levels:
- Expansion of the seller and cash app system. Afterpay’s global merchant base will fuel Square’s growth through larger salespeople and expansion into new countries, while encouraging the addition of new salespeople to Square. Afterpay will expand the Cash App product range by giving customers the option of handling their refunds and also allowing customers to discover new merchants for themselves when the Afterpay app is integrated into Cash App.
- Added value, differentiation and greater standards for Afterpay. Afterpay will benefit from Square’s large and growing customer base, with more than 70 million active cash app customers and millions of sellers annually, expanding Afterpay’s reach and growth both online and in the field. Afterpay customers will be able to enjoy the financial instruments on Cash App including money transfers, stock and bitcoin purchases, Cash Boost, etc.
- Long-term growth with meaningful synergies in sales. Square believes Afterpay will result in an increase in gross profit growth, with a slight decline in Adjusted EBITDA margin expected in the first year after the deal closes. Square recognizes an investment opportunity in Afterpay’s strong Economics unit, as well as attractive growth synergies, including the opportunity to launch offers and generate additional growth for sellers, as well as better retention of Cash App customers.
Afterpay’s two founders and CEOs will move to Square upon completion of the transaction and will lead Afterpay’s merchant and consumer business through Square’s seller and cash app systems. Square will add an Afterpay board member to Square’s board of directors upon graduation.
