Square to acquire BNPL venture Afterpay in $29bn deal

Square, the payments venture founded by Twitter’s Jack Dorsey, is set to acquire Australian buy now, pay later provider Afterpay in an all-stock deal worth about $29 billion.

Closing of the transaction is expected in the first quarter of calendar year 2022.

“Square and Afterpay have a shared purpose. 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,” says Dorsey.

“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.”

Afterpay + Square! https://t.co/4UVDOtyI8a
— jack (@jack) August 1, 2021

"By combining with Square, we will further accelerate our growth in the US and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable capabilities and services to our merchants and consumers,” comment Anthony Eisen and Nick Molnar, Afterpay Co-Founders and Co-CEOs.

“We are fully aligned with Square’s purpose and, together, we hope to continue redefining financial wellness and responsible spending for our customers.”

“The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world.”

“It also provides our shareholders with the opportunity to be a part of future growth of an innovative company aligned with our vision.”

This will start an acquisition frenzy
The battle is at the POS @psb_dc @leimer https://t.co/rQCDTPOZ4m
— Shaul David (@ShaulDavidUK) August 1, 2021

Klarna

Afterpay rival, Klarna, doubled its valuation in three months to $45.6 billion, after receiving investment from SoftBank’s Vision Fund 2 in June.

“Klarna’s growth is founded on a deep understanding of how the purchasing behaviours of consumers are changing, an evolution which we believe is accelerating,” said Yanni Pipilis, Managing Partner at SoftBank Investment Advisers.

Trouble ahead?

There has been increasing political and regulatory scrutiny of buy now, pay later companies in recent times, based around concerns that they tempt consumers to purchase goods they cannot afford.

As a result, Klarna has been on something of a charm offensive, whilst also taking aim at traditional banks and credit card companies.

This includes the launch of a UK campaign titled #WhyPayInterest.

Running across OOH, online, on social media and in print, it aims to highlight the difference between BNPL products and traditional credit cards, challenging what Klarna calls “outdated business models and products that don’t serve consumers’ best interests”.