Jack Dorsey’s Square buys out Australia’s Afterpay for $29 billion

Square Inc, the payments firm of Twitter Inc co-founder Jack Dorsey, is set to purchase buy now, pay later (BNPL)pioneer Afterpay Ltd for $29 billion.

The takeover underscores the popularity of a business model that has upended consumer credit by charging merchants a fee to offer small point-of-sale loans which their shoppers repay in interest-free instalments, bypassing credit checks.

It also locks in a remarkable share-price run for Afterpay, whose stock traded below A$10 in early 2020 and has since soared as the COVID-19 pandemic – and stimulus payments to a workforce stuck at home – saw a rapid shift to shopping online.

The all-stock buyout would value the shares at A$126.21 ($92.65), the companies said in a joint statement on Monday.

That means a payday of A$2.46 billion each for Afterpay’s founders, Anthony Eisen and Nick Molnar. China’s Tencent Holdings Ltd, which paid A$300 million for 5% of Afterpay in 2020, would walk away with A$1.7 billion.

The Afterpay founders said the deal marked “an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world”.

Afterpay shares jumped slightly higher than Square’s indicative purchase price in early trading before settling just below it at A$119.36 by late morning, up 23.5% and helping push the broader market up 1.2%.