Saudi Press

Saudi Arabia and the world
Saturday, Feb 22, 2025

The $29 billion deal in 11 weeks: how Square bought Afterpay

The $29 billion deal in 11 weeks: how Square bought Afterpay

Jack Dorsey introduced the world to expressing itself in just 140 characters as the creator of Twitter Inc, and his payments company, Square Inc, also likes getting straight to the point.

Square’s purchase of Australian buy now, pay later provider Afterpay Ltd for $29 billion in stock, the largest ever acquisition by Dorsey’s firm, was consummated within three months, said four people with knowledge of the deal talks.

Such a short time is regarded as uncommon in the world of huge cross-border M&As, where armies of advisers can spend months negotiating key terms and poring over books and business plans to ensure there are no hidden skeletons.

As the business boomed in the past year, Afterpay fielded takeover interest from six potential buyers, including U.S. consumer banks, one of the sources said, but Square made more sense as the companies were already exploring services tie-ups.

Square wanted to provide a buy now, pay later feature for its popular Cash app, while Afterpay hoped to accelerate growth in the U.S. market, in competition with Affirm and Klarna.

The deal talks for the largest buyout ever for an Australian firm started last year to explore a strategic partnership in response to growing competition from incumbents, and turned towards acquisition after key executives of the two firms met in Hawaii in May, three of the sources said.

The executives left the tropical island after a couple of days with the agreement that they needed to be combined, the sources said, adding that it took just 11 weeks from that point to finalise the transaction terms.

There were good reasons for the speed - banks and new entrants are aiming for a bigger slice of the buy now, pay later services that have boomed in the past year, as homebound consumers used them to borrow and spend online during the coronavirus pandemic.

The Australian firm’s share price slumped 10% on July 14 on media reports that Apple Inc was working on a buy now, pay later feature in coordination with Goldman Sachs Group Inc.

Such volatility put an emphasis on brevity. Shares in both companies reacted positively to the deal.

On Monday, Afterpay closed in Sydney up 18.76%, while Square climbed 10.15% in New York, despite the prospect of shareholders being diluted by the new shares to pay for the profitless Australian company. Afterpay rose a further 11.3% on Tuesday.

Spokespersons at Square and Afterpay declined to comment on the deal background. The sources declined to be named as they were not authorised to talk to the media.

‘PROJECT POCKET’


Buy now, pay later firms lend shoppers instant funds, typically up to a few thousand dollars, which can be paid off interest-free. They generally make money from merchant commissions and late fees, rather than interest payments.

In this way, they sidestep the legal definition of credit and therefore credit laws.

That means such providers are not required to run background checks on new accounts, unlike credit card companies, and normally request just an applicant’s name, address and birth date. Critics say that makes the system an easier fraud target.

Executives at Square and Afterpay shared a desire to expand access to customers globally and saw combining forces as the best way to take on competitors, both present and potential, in the business, the sources said.

Afterpay co-founder Nick Molnar first got to know Amrita Ahuja, chief financial officer at Square, years ago when he was living in the United States. Ahuja then introduced the Australian to Dorsey, said one of the sources.

The deal talks, internally named “Project Pocket”, picked up pace after Afterpay engaged Goldman to explore a U.S. listing in April, said another, which was soon followed by Square showing an interest in buying the company.

Soon after, Afterpay hired boutique Qatalyst Partners to evaluate the offer, with the option that if the deal fell through they would push ahead with the plan for the U.S. listing, said another person.

Sydney-based boutique advisory Highbury Partners was also retained by Afterpay’s board.

The Hawaii trip finally led to the conclusion that each had what the other wanted.

For Square, it was Afterpay’s expertise in buy now, pay later and its existing relationships with large merchants. And Afterpay envied Square’s vast reach and popularity in the U.S. market.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Saudi Arabia and the United States Strengthen Ties Amid Global Developments
Saudi Arabia Hosts Global Conference to Promote Islamic Unity
The Impact of Artificial Intelligence on Education and Child Development
Saudi Arabia Announces Competition for Best Founding Day Outfits
Saudi-EU Food Security Officials Hold Talks to Strengthen Collaboration
Putin Expresses Gratitude to Saudi Crown Prince for Hosting US-Russia Talks
UK and Saudi Arabia Enhance Collaboration in Innovation and Technology
Denmark's Embassy in Riyadh Showcases Danish Cuisine with Saudi Influence
Saudi Artist Salman Al-Amir Unveils 'Tafawut' Exhibition in Riyadh
Saudi Arabia Offers Condolences to Kuwait Following Military Exercise Fatalities
Saudi Ministry of Islamic Affairs Completes Ramadan Preparations in Madinah
Etidal Secretary-General Hosts UN Counter-Terrorism Director in Riyadh
ADNOC Drilling Targets Over $1 Billion in Investments for 2025 Amid Gulf Expansion Plans
Derayah Financial Achieves Remarkable Growth in Saudi Brokerage and Asset Management
Saudi Arabia Shortlists 30 Firms for Mining Licenses in Eastern Province and Tabuk
Saudi Foreign Minister Engages Counterparts at G20 Meeting in Johannesburg
Oil Prices Decline Amid Rising US Inventories
Saudi Arabia's NDMC Plans Green Bond Issuance by 2025
Moody’s Affirms Egypt’s Caa1 Rating Amid Positive Economic Outlook
Oman and Saudi Arabia Strengthen Economic Ties with New Agreements
Saudi Arabia Investments Propel Expansion of Qurayyah Power Plant
Saudi Capital Market Authority Advances SPACs and Direct Listings
Global Energy Leaders Gather in Riyadh for Symposium on Energy Outlooks
Al-Ahsa Region Sees 500% Growth in Tourism as Saudi Arabia Prioritizes Development
Saudi Arabia Advances Entrepreneurial Ecosystem in Al-Ahsa with New Agreement
King Salman Approves Official Saudi Riyal Symbol
Saudi Credit Card Lending Reaches $8.4 Billion Amid Digital Payment Expansion
King Salman Approves Official Symbol for Saudi Riyal
Putin Thanks Saudi Crown Prince for Facilitating U.S.-Russia Discussions
Saudi Foreign Minister Attends G20 Meeting in Johannesburg
Saudi Arabia Prepares for Nationwide Founding Day Celebrations
Inauguration of Hira Park and Walkway Enhances Jeddah's Urban Landscape
Crown Prince Hosts Leaders for Informal Meeting in Riyadh Amid Gaza Rebuilding Plans
Saudi Official Highlights Achievements and Media's Role in National Transformation
Three Expatriate Women Arrested for Prostitution in Riyadh
Saudi Arabia's Diplomatic Evolution Highlighted at Saudi Media Forum
Healthy Eating and Preparation Essential for Ramadan Fasting
Saudi Arabia and Japan Forge Sustainable Textile Partnership
Advanced Limb Surgery Restores Mobility in Pediatric Cancer Patient
Jeddah Event Explores AI's Role in Boosting Saudi Arabia's SME Sector
UN Representative Highlights AI's Role in Perpetuating Gender Stereotypes
Saudi and Jordanian Leaders Discuss Enhanced Security Cooperation in Amman
Saudi British Society Honors Cultural Bridge-Builders at London Gala
Saudi Media Forum 2025 Explores AI's Role in Modern Journalism
Saudi Arabia's Saqer Al-Moqbel Appointed as WTO General Council President for 2025–2026
Saudi Deputy Ministers Engage in Diplomatic Discussions with U.S. and Dutch Officials in Riyadh
Saudi Arabia to Launch Iftar Program in 61 Countries During Ramadan
Saudi Visitors Expected to Spend £942 Million in UK During 2025
Saudi Arabia Gifts Kaaba's Kiswah to Uzbekistan's Center of Islamic Civilization
Digital Cooperation Organization Concludes Fourth General Assembly with Multiple Agreements
×