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Square To Buy Australia's Afterpay In $29 Billion All Stock Deal
Square is buying Australian financial technology (fintech) company Afterpay as it looks to expand further into the installment loan market.
Square's $29 billion U.S. all-stock deal represents a roughly 30% premium to Afterpay's last closing price. Shares of Afterpay surged on the news and closed nearly 19% higher in Asian trading Monday (August 2).
Square, a San Francisco-based payments company, already offers installment loans, which it said has been a“powerful growth tool” for its core business. Square plans to integrate Afterpay into both its seller and Cash App ecosystems.
Afterpay lets customers pay in four interest-free installments and pay a fee only if they miss an automated payment. Its 16 million customers will eventually be able to manage installment payments directly through Square's Cash App.
Installment loans have been around for decades and have been historically used for big-ticket purchases such as furniture. Online payment players and fintech companies have been competing to launch their own version of“pay later” products for online items.
The deal to acquire Afterpay is expected to close in the first quarter of 2022.
Square also announced its second-quarter results at the same time it unveiled its acquisition of Afterpay.
Square's gross profit increased 91% from a year ago, which marked a record quarterly growth rate for the payments company. The Cash App's profit was up 94% from a year ago. Net revenue excluding Bitcoin came in at $1.96 billion U.S. for the quarter, an 87% rise from a year earlier.
Square's Cash App now has 40 million monthly transacting customers, the company said.
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