The US payments platform founded by Twitter’s Jack Dorsey – Square – is on track to acquire buy now, pay later giant – Afterpay – in a $39 billion all-stock deal, which has been unanimously recommended by the latter’s board. Marking the single largest corporate transaction in Australian history, Afterpay co-founders Nick Molnar and Anthony Eisen will also join Square once the ink has dried (as well as welcome revised net worths).
Under the terms of this monster agreement, Afterpay shareholders will receive 0.375 shares of Square Class-A common stock (NYSE: SQ) for every share of APT they own, providing the collective with about 18.5% ownership of the combined company; and providing the ASX darling with an implied price of approximately $126.21, based on Square’s Friday close. For reference, that’s a tidy bump of over 30% above Afterpay’s last close. No action will be required for those holding APT at the moment, and depending on a ruling from the Australian Taxation Office, this development will even be tax free.
“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,” says Jack Dorsey, Chief Executive of Square.
“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 into their hands.”
“The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world,” says Nick Molnar and Anthony Eisen.
“It also provides our shareholders with the opportunity to be a part of future growth of an innovative company aligned with our vision.”
Nick Molnar’s 6.87% stake in Afterpay means the deal is valued at $2.68 billion for the country’s youngest self-made billionaire. Anthony Eisen’s 6.72% stake translates to a $2.62 billion payday (again, all in stocks).
Afterpay had previously been exploring the possibility of listing its shares over in the US. Partnering up with an already-burgeoning entity which has an existing American presence, however, offers far more certainty for success. Especially considering the growing stateside competition in PayPal, Klarna, Affirm, plus Apple. And as noted by the AFR, this will provide Molnar and Eisen themselves with a more certain exit.
Since its establishment back in 2014, Afterpay has accumulated a userbase of 16 million, 100,000-strong network of global retailers, and recorded $11.1 billion worth of sales in the last financial year alone (+112% compared to the year prior). Square, on the other hand, is currently used by some 70 million consumers.
The entire transaction is expected to be finalised by Q1 of 2022.