Square, the digital payments platform led by Twitter founder Mr. Jack Dorsey, has secured shareholders’ approval for the issuance of new shares for the acquisition of the buy now, pay later (BNPL) company, Afterpay, bringing Australia’s largest ever merger deal to its final stages.
The purchase by Square is underlined by the growing popularity of an industry that has upended traditional consumer credit. Square reached an agreement to purchase the BNPL pioneer Afterpay for $29 billion in August.
In a statement, Afterpay said that the transaction is expected to be completed through the first quarter of next year. Apart from shareholders’ consent, the deal will also require the approval of Australian regulatory authorities, including the Foreign Investment Review Board.
The deal promises immediate returns for investors, with existing Afterpay investors to be granted 0.375 shares of Square Class A common stock for every unit of Afterpay they hold. Afterpay shareholders are expected to own 18.5 percent of the company once the deal is enacted.
In a joint statement, the two companies said the all-stock deal would bring Afterpay into Square’s umbrella of peer-to-peer and merchant transaction capabilities.
The US-based firm in its statement said that Afterpay’s BNPL functionality will be added to the Square Seller and Cash App ecosystems, enabling small merchants access to the increasingly popular method of payment and allowing Afterpay users to manage their payments on the existing Cash App platform.
When the deal was announced, Afterpay co-founders and co-CFOs Mr. Anthony Eisen and Mr. Nick Molnar stated that the deal aligns with the company’s global ambitions. “By combining with Square, we will further accelerate our growth in the US and globally, offer access to a new category of in-person merchants,” they said.