Square Payments Inc., co-founder of TwitterJack Dorsey announced last Sunday (1) the acquisition of the Australian company Afterpay for 29 billion US dollars (about 149 billion Brazilian reals).
The deal, which is expected to close in the first quarter of 2022, has The highest amount paid by a company in Australia in historyAccording to Reuters. The previous record was a $16 billion deal to sell the Westfield shopping mall chain, in 2018, to real estate company Unibail-Rodamco.
Afterpay’s acquisition is also Square’s largest ever.. In March of this year, Dorsey already acquired the streaming service Tidal, created by rapper Jay-Z, for $297 million.
In a statement, Dorsey said Square and Afterpay share a goal of making the financial system more fair, accessible and inclusive.
Together, we can better connect the Cash app and the seller ecosystem [dois serviços da Square] To offer more attractive products and services to merchants and consumers, and put the power back in their hands.”
Square offers payment solutions, such as credit card readers, for small merchants – Photo: Disclosure / Square
Square offers payment solutions for small merchants, which includes credit card readers and tools for retailers to sell their products online.
The company also owns Cash app, an app that allows you to transfer money quickly. According to Square, the service reached the 40 million active customers mark in June 2021.
Founded in 2009 by Jack Dorsey and Jim McKelvey, Square has seen its revenue boom. In the second quarter of 2021, the company generated a total profit of US$1.14 billion (R$5.9 billion), an increase of 91% over the same period in 2020.
Afterpay offers a kind of concessional credit service to help consumers in countries where installment purchases are not a common practice.
The company uses a model known as “Buy Now, Pay Later”, where you can lend up to a few thousand dollars to customers to make interest-free installment purchases.
Afterpay’s profit comes from fees charged to partner retailers, which do not fit the model as a traditional credit service, and therefore are not subject to the rules of this sector.
Afterpay uses a form known as “buy now, pay later” – Image: Reuters / Loren Elliott / Illustration
For some merchants, the business is beneficial, as their products and services are within the reach of more consumers. According to Square, Afterpay closed the second quarter with 16 million users and nearly 100,000 partner stores.
Afterpay co-founders Anthony Eisen and Nick Molnar, who founded the company in 2014, say the deal will help their company reach more customers.
“By collaborating with Square, we will further accelerate our growth in the United States and globally, provide access to a new class of traditional stores, and provide a broader platform of new and valuable features and services for our merchants and consumers,” they said.
The $29 billion deal
Square mentioned it The amount involved in the settlement was determined based on the value of the common stock as of July 30. $29 billion is paid out in equity only.
With the deal, Dorsey must integrate the Afterpay platform with the Cash app and its merchant tools. The goal is that its partners can also offer the option of paying in interest-free installments.
For Square, the Afterpay model is an attractive opportunity due to the change in the profile of consumers, especially younger ones, who are looking for alternatives to traditional credit options.
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