Square—controlled by Twitter cofounder Jack Dorsey—said Monday it has agreed to buy Australian fintech company Afterpay for $29 billion in an all-share deal that promises to create a global payments giant.
Under the deal, Afterpay said its shareholders will receive 0.375 common class A shares of Square for each Afterpay share held, valuing each Afterpay share at A$126.21 ($92.78), a 30.6% premium from last Friday’s closing price. Square may opt to pay 1% of the total consideration in cash.
“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, Dorsey said in a statement. “Together we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers.”
Since its founding in 2015, Afterpay has revolutionized the consumer credit industry by letting people pay for small-ticket items such as clothes in four interest-free installments. The bulk of Afterpay’s revenue comes from the 4-6% fee it charges retailers for each transaction.
The buy now, pay later scheme gained popularity at the height of the Covid-19 pandemic last year as consumers—who were stuck at home as governments enforced lockdowns to curb the spread of coronavirus—turned to online shopping.
Afterpay’s cofounder and CEO Nick Molnar says that millennials have a “total aversion” to credit cards because they can lead to compounding debt. In 2014, he joined forces with his then-neighbor, Anthony Eisen, the former chief investment officer at Australian holding company Guinness Peat Group, to pursue their fintech startup.
They took the company public in April 2016, listing it on the Australian Stock Exchange. Afterpay says it has more than 16 million customers and nearly 100,000 merchant globally using it services, as of June this year. Its platform is available across Australia, Canada, France, Italy, New Zealand, the U.K., the U.S. and Spain.
The deal will further boost the fortunes of Afterpay’s two cofounders. With a net worth of $1.8 billion each, Eisen and Molnar were ranked No. 28 and No. 29, respectively, among Australia’s wealthiest individuals when the World Billionaires List was published in April.