Jack Dorsey-led payments giant Square to acquire Afterpay for $126.21 per share

Just under 5 years and 3 months since listing on the ASX for $1 per share Afterpay (ASX:APT) is being acquired by US payments giant Square (NYSE:SQ).

Square, which is led by Twitter founder Jack Dorsey, will pay US$29 billion ($39 billion) entirely in its own shares.

Based on Square’s closing price of US$247.26, this values Afterpay at A$126.21 per share which is a 30.6% premium to Friday’s closing price of $96.66.

At market open, Afterpay’s shares rose by over 25% to nearly match the offer price.

Afterpay (ASX:APT) share price chart

What now for Afterpay and Square?

Square will integrate Afterpay into its existing Seller and Cash App business units.

The integration will enable it to facilitate an expanded BNPL offering on the merchant side, and give Afterpay customers the ability to manage their instalments directly in the cash app, APT said.

The companies say the deal, which will close in the first quarter of next year, will enable them to deliver more compelling products and services.

“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,” Square’s Dorsey declared.

“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.”

Commenting on his LinkedIn profile, Afterpay co-founder Nick Molnar alaso hailed the deal, saying it would not only be good for his company but the broader Australian tech sector.

Afterpay looking to North America

Afterpay also gave its shareholders a trading update, releasing unaudited figures for FY21.

It recorded $22.4 billion in underlying sales on a constant currency basis, more than double the $11.1 billion it recorded in FY20.

Of that total, $11.1 billion came from North America, $9.4 billion from Australia and New Zealand and $1.9 billion from its Clearpay business in the EU and Britain.

Gross profits rose from $384.9 million to $710 million, which active customers climbed from 9.9 million to 16.2 million — 10.5 million of which came from North America.

While the Square deal came completely out of the blue for Afterpay shareholders, it was evident it was looking more towards the US for some time in light of growing customer numbers.

It had floated the idea of listing on the NASDAQ earlier this year.

As part of the deal, Square has agreed to establish a secondary listing on the ASX, which will allow Afterpay shareholders to trade Square shares via CHESS Depositary Interests (CDIs).