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Square, Afterpay, doing the real thing

Legit. | Legal News
Legit. | Legal News
Hello! One slightly longer M&A breakdown for you guys this week. (Experimenting with content lately so email me feedback!).

M&A
Square + Afterpay
Jack Dorsey’s Square is buying ‘buy now, pay later’ pioneer Afterpay for $29 billion in an all-stock deal, it announced Monday.
An in depth breakdown
Square is made up of two parts. It has a consumer business via Cash App, and it has a large business division that offers payments tech to corporate customers.
Afterpay is a BNPL player with its own merchant network and customer base.
There’s so much alignment between these two.
They both have complementary merchant ecosystems: Afterpay targets enterprise merchants, while mid-market merchants capture most of Square’s global payment volume.
After the acquisition, Afterpay’s business customers will become Square customer’s, inflating Square’s merchant footprint in the enterprise sector while also giving merchants the chance to offer BNPL options to their own consumers.
Also, on a much more rudimentary level, it was only a matter of time before Square jumped into the BNPL space.
The likes of Klarna and Affirm are rocketing in popularity, while Paypal’s own BNPL service is seeing strong results. Rumors are also swirling that Apple is looking to throw its hat into the ring. The choice for Square was two-fold: either follow Paypal’s and Apple’s footsteps and build out an internal BNPL arm, or buy an existing BNPL giant that already had strong synergies with its own business.
It did the latter, and the result is a masterclass in strategic M&A.
THE TAKEAWAY(s)
  • Square and Afterpay are taking a big slice of the payments industry at a time when competition is heating up.
  • This is Square’s second big acquisition this year after it paired up with Jay Z’s Tidal, showing “it’s not shy when it comes to bold moves to expand its business lines.” (Kudos, Axios).
  • The deal is a little awkward for payment platforms Stripe and Adyen, who both flaunted large integrated partner agreements with Afterpay last year.
Also… this tweet is funny.
Mengxi Lu
Square buying Afterpay in all stock is the ultimate demonstration of how buy now pay later works
Legit one liners
Non legal link
Do the Real Thing | Scott H Young
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