Afterpay is the biggest BNPL player in Australia and they have the first mover advantage in the USA as well. APT shares have slipped up this year despite the company not putting a foot wrong. Today, APT shares are the best performer on the ASX 200 index with shares surging over 20% as the company announced a fantastic FY21 trading update. Furthermore, Afterpay also revealed that their board has unanimously accepted an acquisition offer from US FinTech giant, Square Inc. (NYSE: SQ).
Why is Afterpay Shared Price surging on ASX today?
Square, Inc. (NYSE: SQ) and Afterpay today announced that they have entered into a Scheme Implementation Deed under which Square has agreed to acquire all of the issued shares in Afterpay by way of a recommended court-approved Scheme of Arrangement.
The transaction has an implied value of approximately US$29 billion (A$39 billion) based on the closing price of Square common stock on July 30, 2021, and is expected to be paid in all stock. The acquisition aims to enable the companies to better deliver compelling financial products and services that expand access to more consumers and drive incremental revenue for merchants of all sizes. The closing of the transaction is expected in the first quarter of calendar year 2022, subject to the satisfaction of certain closing conditions outlined below.
“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,” said Jack Dorsey, Co-Founder and CEO of Square. “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, the pioneering global ‘buy now, pay later’ (BNPL) platform, will accelerate Square’s strategic priorities for its Seller and Cash App ecosystems. Square plans to integrate Afterpay into its existing Seller and Cash App business units, enable even the smallest of merchants to offer BNPL at checkout, give Afterpay consumers the ability to manage their installment payments directly in Cash App, and give Cash App customers the ability to discover merchants and BNPL offers directly within the app.
APT shares surged higher as a result of the acquisition announcement. The implied value of APT share price based on the value of the deal is $126.21 a share – an over 30% premium to the APT share price as of market close of Friday, 30th July. Currently trading at $116 a share, APT shares are expected to be bullish in the coming days as the share price may inch closer to the implied value of APT shares.
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