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Square bags buy now pay later sign Afterpay for $ 29 billion

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Square bags buy now pay later sign Afterpay for $ 29 billion

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Square Inc said on Monday that it agreed to Buy, Buy Now, Pay Later (BNPL), the pioneer Afterpay Ltd to create a global online payments giant, offering a 30% premium on a share swap deal that will become Australia’s largest purchase. .

The following are quotes about the agreement from analysts, strategists, and market watchers.

WILSONS STOCK EXCHANGE ADVICE AND ROTATION

Square’s all-scrip offering at $ 39 billion (A $ 126.21 / share) marks Afterpay’s potential to achieve ever-faster acceleration on its global trajectory.

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Given the nature of Square’s business and its ecosystem of Merchants and Consumers, we see few realistic competing suitors beyond the big tech giants …

Now that Australia-New Zealand has lagged behind the United States in terms of group contribution, we believe Afterpay will likely face limited regulatory hurdles.

Few other suitors are as suitable as Square. Since Klarna Inc is rumored to be building a strategic stake in Zip Co Ltd, and PayPal Holdings Inc is already achieving early success at its native BNPL, in addition to leading US tech titans (Amazon.com Inc , Apple Inc) pushing an 11 hour offer, we expect a competitive proposal from a new party to be low risk.

CREDIT SUISSE

There is strategic merit behind the merger (customer and merchant growth / cross-selling) and with a scrip deal, Afterpay shareholders can share in the benefits … We consider a competitive offering unlikely at this stage.

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UBS

Square’s implied offer valuation is materially above our target price, but is almost perfectly in line with the consensus target price (FactSet) for the subsequent payment of $ 125.99. UBS does not cover Square, although we note that the consensus price target for Square is $ 281.76, which based on the fixed exchange rate of 0.375 and the same currency assumption that Afterpay uses, would imply a valuation of A $ 143.82 per Afterpay share. . .

MATHAN SOMASUNDARAM, CEO OF DEEP DATA ANALYTICS

The acquisition makes sense for both parties. It is a large multiple to buy another large multiple to offer the most exposure to the market / customer.

Afterpay management is selling at a discount to the February high after releasing the potential growth outlook that suggests we may be near the peak in fintech optimism.

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I don’t expect a counter offer for Afterpay, but it indicates that industry consolidation at BNPL has begun.

HENRY JENNINGS, SENIOR ANALYST, CONSULTANCY MARCUS TODAY

I’m not sure it was the most generous offer considering Afterpay hit $ 160. I suspect the market may be a bit disappointed …

The largest acquisition in history with a huge multiple, will have repercussions in the sector …

Zip Co Ltd is the one that is the most interesting now given that Afterpay has pulled off the board and is the closest to Afterpay with the largest US business.

RBC CAPITAL MARKETS

Since investors have been wondering what the ‘Killer App’ would be to link the two Square ecosystems more meaningfully, it would appear that the full integration of BNPL (via Afterpay) in and between Cash App and Seller is the answer. .

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TRUIST VALUES

At first glance, we argue that the Afterpay acquisition is a “proof of concept” moment for BNPL, both validating the industry and creating a formidable new competitor for Affirm Holdings Inc, PayPal and Klarna …

We expect Square to invest heavily to integrate Afterpay and accelerate organic revenue growth.

EMANUEL DATT, FOUNDER, DATT CAPITAL

It is a transaction that really defines the market. It is literally the largest corporate transaction in Australian history. It really moves the needle and validates the work Afterpay has been doing from a valuation standpoint. (Reporting by Sameer Manekar, Paulina Duran, and Byron Kaye; Editing by Christopher Cushing)

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In-depth reports on the economics of innovation from The Logic, presented in association with the Financial Post.

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