Square is Buying Afterpay in a $29 Billion All-Stock Deal

Fintech company Square, led by CEO Jack Dorsey, is getting further into the “buy now, pay later” trend as it sets out to acquire Australia’s Afterpay for $29 billion in an all stock deal.

With the news announced this past weekend, Square is expanding further into the booming installment loan market. The price tag marks a roughly 30% premium to Afterpay’s last closing price.

“Square and Afterpay have a shared purpose,” said Dorsey, who is also the CEO of Twitter. “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.”

Shares of Afterpay in Australia surged on that news and were up nearly 19% higher on Monday.

In an interview with CNBC’s “Squawk on the Street” Monday, Square CFO Amrita Ahuja said that Square sees the acquisition as an opportunity to create a “more powerful ecommerce platform” that appeases growing consumer interest in “transparent buying opportunities” and offers new ways for merchants to serve their customers.

“We see a real opportunity to enable the next gen consumer that’s looking for different ways and, in this experience, an interest free way of expanding the purchase potential,” Ahuja explained.

“What that ends up doing is merchants pay for the Afterpay experience but they get higher average order volumes, they get greater conversion, they get greater frequency and lower returns and they get a marketing channel from Afterpay… which is ultimately helping those merchants grow there business and that’s what Square is all about.”

Afterpay allows customers to pay in four interest-free installments and pay a fee if they miss an automated payment. The company has 16 million customers. The deal is expected to close in the first quarter of 2022.

Square also announced its second-quarter results on Sunday, revealing gross profit increasing 91% from a year ago, which marked a record quarterly growth rate for the payments company.

Cash App profit was up 94%, while seller jumped 85% from a year ago. Net revenue excluding bitcoin came in at $1.96 billion for the quarter, an 87% rise year over year.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.