Square today announced that it has acquired Afterpay, an Australian buy-now, pay-later company, in a $29B all stock deal.The Square stock closing price on July 30 was $247.26. This is the purchase price. The transaction is expected close in the first quarter 2022, subject to certain closing conditions. Afterpay is valued at a more than 30% premium over its closing price of A$96.66.Jack Dorsey, Square's co-founder and CEO, stated in a statement that they share a common purpose.Afterpay was founded to make the financial system fair, accessible and inclusive. Afterpay's trusted brand is aligned with these principles, he stated in the statement. We can connect our Cash App ecosystems better to provide more compelling products for consumers and merchants.Combining the two companies would result in a payments giant like no other. The buy now, pay it later market has seen a boom in the last 18 months. This appeals especially to younger generations who are drawn to the idea that they don't need credit cards or pay interest, and instead choose to use installment loans. These loans have been widely available online and in stores.Afterpay was used by more than 16,000,000 consumers and close to 100,000 merchants worldwide as of June 30, including top retailers in fashion, homewares and beauty, and sports goods.According to the company statement, Afterpay will help Square achieve its strategic priorities for its Cash App and Seller ecosystems. Square will integrate Afterpay into its Cash App and Seller business units so that even small merchants can offer buy-now, pay later checkout. Afterpay customers will be able to manage their installments directly in Cash app through the integration. Cash App users will be able find merchants and purchase now, pay later offers (BNPL) directly within the app.Afterpays cofounders and coCEOs Nick Molnar and Anthony Eisen will join Square after the deal is closed. They will be able to lead Afterpays respective consumer and merchant businesses. Square announced that it will appoint an Afterpay director to its Board.Afterpay shareholders will receive 0.375 shares Square Class A stock per share. According to Squares Friday close, this would mean a share price of A$126.21.Is there more consolidation? It remains to be seen. Twitter is buzzing about the next deals. In the U.S., Affirm, a rival company founded by Max Levchin (founder of PayPal), went public earlier in the year. Shares closed at $56.32, which is significantly less than the opening price of $146.90 and its 52-week high of $146.90, on July 30. Klarna, a European competitor that is rapidly growing in the U.S., raised $639 million in June to reach a remarkable $45.6 billion post-money valuation.This deal is certain to intensify the BNPL fight for American consumers.
