Beautiful Virgin Islands

Tuesday, Jun 03, 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

Beautiful Virgin Islands
0:00
0:00
Close
Dutch government falls as far-right leader Wilders quits coalition
Harvard Urges US to Unfreeze Funds for Public Health Research
Businessman Mauled by Lion at Luxury Namibian Lodge
Researchers Consider New Destinations Beyond the U.S.
53-Year-Old Doctor Claims Biological Age of 23
Trump Struggles to Secure Trade Deals With China and Europe
Russia to Return 6,000 Corpses Under Ukraine Prisoner Swap Deal
Microsoft Lays Off Hundreds More Amid Restructuring
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
×