/ 03 August 2021

Afterpay’s big payday

AFTERPAY

THE SQUIZ
You know when you buy something and they give you a small, white, square tile to tap your card on? That’s Square. And yesterday, the US business hardware/software business revealed it is set to buy Aussie buy now, pay later (BNPL) success story Afterpay for a cool $39 billion. If/when the deal goes through, it will be the biggest buyout deal in Australian corporate history. Not bad for a company that’s never made a profit…

WHAT’S THE DEAL?
Quite literally…

• Square, which was founded and is run by Twitter billionaire Jack Dorsey, has offered Afterpay shareholders the equivalent of $126.21 per share. That’s not as much as its peak of $158.47 in February, but more than the float price of $1 in May 2016. Which is why the Afterpay board has given the proposal the thumbs up, and recommends that shareholders do the same.

• Speaking of investors, they won’t get cash for their shares. The plan is they will receive shares in a bigger Square that will be listed on US and Aussie stock exchanges.

• Sure, but what about the delicious synergies, you ask? Backers say the deal makes sense because Afterpay gets the funding it needs to expand into the lucrative US market. And for Square, it can turn on the increasingly popular payment option in a heartbeat instead of building it from scratch.

SO WHAT’S NEXT?
There’s a process for things like this. Afterpay shareholders will need to vote on it, and the Federal Court and regulators have to approve it. Those things are expected to be formalities. That means the dotted lines are set to be signed early next year once all the paperwork and legal stuff is done. There’s no need to worry about Afterpay’s billionaire founders… Nick Molnar and Anthony Eisen will each get a payday in the order of $2.7 billion and will join Square to guide the rise and rise in popularity of the payment method. It’s quite a thing…

Image source: Fairfax, Dominic Lorrimer

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