Square, an American fintech company led by Jack Dorsey, will buy Australia’s No. 1 BNPL Buy Now Pay Later company, Afterpay, for about $29 billion, according to the Wall Street Journal. This is the largest acquisition ever by an Australian company. This move is seen as a step to preempt the rapidly growing BNPL market, which is centered on the younger generation.
Afterpay shareholders will receive 0.375 Square Class A shares per share, reflecting a 30% premium based on Afterpay’s latest closing price. The deal is scheduled to be completed in the first quarter of 2022.
When the deal is completed, Afterpay shareholders are expected to own about 18.5 percent of the merged company. Square said it will later integrate Afterpay into its “Seller and Cash App” business unit so that more retailers can provide BNPL services.
Afterpay is an Australian fintech company that has grown rapidly under the business model of Buy Now, Pay Later. Afterpay’s payment system allows users to pay only part of the price of the item and purchase the item immediately, and pay the rest four times without interest. Customers pay fees only if they miss automatic payments, and the cumulative cap on late fees prevents their debts from increasing. However, many of the payment requests are rejected using big data to filter out customers who are likely to be overdue.
Through the global financial crisis, it has grown to become Australia’s most valuable fintech company, penetrating MZ generations who are afraid of increasing their debts like credit cards. It provides services in Australia, the United States, Canada, New Zealand, the United Kingdom, France, Italy and Spain, and has more than 16 million users worldwide.