Business Maverick: Square to Buy Afterpay for $29 Billion to Tap Younger Users

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Square Inc., the digital-payments platform led by Twitter Inc. founder Jack Dorsey, agreed to buy Australian buy-now, pay-later company Afterpay Ltd. for $29 billion in its largest-ever acquisition.

The all-stock offer values Afterpay shares at A$126.21 each, 31% higher than Friday’s closing price of A$96.66, the companies said in a statement. Still, that’s less than Afterpay’s February high of A$158.47. The stock jumped as much as 29% to A$125 in Sydney trading Monday.Square Buys Afterpay in Scrip Deal at 31% Premium: M&A Snapshot

“It’s very different from the traditional consumer-financing business model,” Ahuja said, describing “buy now, pay later” as an “alternative” to traditional credit. “Since our founding days we have seen it as a key priority for our customers, whether merchants or consumers, to get fast access to funds,” she added, but declined to say whether Square would offer other traditional finance options, like a credit card.

The deal should also help boost Cash App’s total user base by adding Afterpay’s 16 million users to Cash App’s existing user base of 70 million annual users, Ahuja said.Larger competitors have pushed into the market recently, adding to the challenges for Afterpay and its peers. Apple Inc. is teaming up with Goldman Sachs Group Inc.

The acquisition would be easily the biggest deal for an Australian company, eclipsing the $16.6 billion a group of pension funds last month bid for Sydney Airport, only to have the offerSquare recently launched its banking operations, including checking and savings accounts for small businesses, and offers loans. The addition of Afterpay also gives the digital payments company a chance to expand into consumer lending, which it doesn’t currently offer.

 

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