Fintech company Square, led by Twitter CEO Jack Dorsey, announced Sunday that it plans to acquire Afterpay’s buy-now-pay-later platform for $ 29 billion. If the purchase is approved, Square will become a strong player. in the field of online payments.
IN joint press release on sunday, Square and Afterpay said the sale will allow both companies to expand consumer reach and increase revenue for merchants of all sizes. Square integrates Afterpay, an Australian company that allows customers to pay for purchases in installments without interest. in their merchants and the Cash App platform. Afterpay currently serves over 16 million customers and operates with nearly 100,000 merchants worldwide.
The effect will be threefold. The companies explained that the acquisition will allow even the smallest Square merchants to offer installment payments at checkout, and Afterpay customers will be able to manage their payments. payments in the Cash app and allows Cash App users to find businesses that offer the Afterpay payment option in the app.
“Square and Afterpay have a common goal. We’ve built our business to make the financial system fairer, more accessible and inclusive, and Afterpay has built a trusted brand that lives up to these principles, ”Dorsey said. “Together, we can better connect our Cash App and merchant ecosystems to deliver even more compelling products and services to merchants and consumers, putting power back in their hands.”
The sale has been approved by the boards of directors of Square and Afterpay, although shareholders and regulators still have to give it the green light.It is expected to be completed in the first quarter of 2022. Square will pay for the deal with all of its shares, and Afterpay co-CEOs Anthony Eisen and Nick Molnar will join Square. At Square, Eisen and Molnar will run Afterpay’s commercial and consumer business. In addition, Square will also nominate one Afterpay director to its board of directors upon completion of the deal.
How The newspaper “New York Times noted that it is easier said than done to get regulatory approval. The Justice Department recently paid close attention to prospective acquisitions in the fintech sector. In 2020, he sued to block Visa’s proposed $ 5.3 billion acquisition of the Plaid payment platform, arguing that permission would allow Visa. “Online Debit Monopolist”, To eliminate its competition. In the end, the companies abandoned their merger plans.
Square dismissed antitrust concerns in a conversation with the Times. Amrita Ahuja, the company’s CFO, said the buy-now-pay-later industry is still “highly competitive” and has great room for growth.
“Square and Afterpay are two very complementary businesses where, when combined, you can create a broader product offering for consumers and merchants and more choices,” Ahuja said.
The news of the merger came on the same day Square released its second quarter results, which showed the steady growth of the company. Square said its gross profit rose 91% year over year to $ 1.14 billion, with its sales division accounting for $ 585 million and Cash App accounting for $ 546 million.