Square, a US financial technology company, announced on Monday that it had agreed to buy Australian "buy and pay" company Afterpay, worth about US $29 billion (A $39 billion), in an all-stock deal. This is Square's biggest acquisition to date.
Afterpay allows consumers to buy goods on credit and then pay by installments. The company was founded in Sydney in 2015 and currently employs more than 700 people worldwide. As of Friday's close, the company had a market capitalization of about A $27.9 billion.
The acquisition is expected to be completed in the first quarter of 2022, the two companies said in a statement.
Square recently launched a banking business, including opening checks and savings accounts for small businesses and providing loans. The addition of Afterpay will give the digital payments company the opportunity to enter the consumer lending field.
Square CEO Jack Dorsey said in a statement: "Square and Afterpay share a common goal. Our business is to make the financial system fairer, accessible and inclusive, and Afterpay has built a trusted brand that meets these principles. "
Square plans to integrate Afterpay into its existing Seller and Cash App business units, the companies said. This will enable merchants to offer the "Buy now, pay later" option at checkout, allowing Afterpay consumers to manage their installments directly in Cash App, and allowing Cash App customers to discover merchants and installment services directly in the application.
Square also reported a gross profit of $1.14 billion in the second quarter, up 91 per cent from a year earlier. Total transaction payments (GPV), or total payments processed on the Square platform, increased 88% to $42.8 billion. Total revenue, including bitcoin, is $4.68 billion. Revenue from Bitcoin alone reached $2.72 billion, below analysts' expectations of $3.4 billion. Square said Bitcoin revenue fell because "Bitcoin prices are relatively stable, which has affected trading activity compared with previous quarters."