Square, Inc. (later renamed Block, Inc.) → Afterpay Limited
completedSquare, Inc. agreed to acquire Australian buy-now-pay-later pioneer Afterpay via a court-approved scheme of arrangement, with Afterpay shareholders receiving 0.375 of a Square Class A share for each Afterpay share held. At announcement (based on Square's July 30, 2021 closing price) the deal was reported as approximately A$39 billion (~US$29 billion), making it the largest M&A transaction in Australian corporate history at the time. The deal completed on January 31, 2022, by which point Square (renamed Block, Inc. in December 2021) had merged with Afterpay.
Square wanted to tap the fast-growing buy-now-pay-later segment and deepen the connection between its two ecosystems — the Seller (merchant) platform and Cash App. Integrating Afterpay let even small Square merchants offer installment payments at checkout, let Afterpay users manage payments inside Cash App, and gave Square access to Afterpay's largely younger (Millennial/Gen Z), credit-card-averse user base of around 16 million consumers and roughly 100,000 merchants, supporting Block's broader push into consumer lending and financial inclusion.
Afterpay's co-founders/co-CEOs Anthony Eisen and Nick Molnar framed the tie-up as a way to accelerate Afterpay's global expansion (especially in the US) by plugging into Square's scale, capital, and merchant/consumer network, at a substantial premium and while BNPL competition from Klarna, Affirm, PayPal and others was intensifying.
Square shares initially rose on the announcement (up as much as ~14% intraday, closing +10.16% on August 2, 2021, partly on strong Q2 earnings released the same day). Afterpay shares jumped toward the implied offer price on the ASX. Because the deal was all-stock with a fixed exchange ratio, the implied deal value fluctuated with Square/Block's share price over the following months; Block's stock fell sharply in late 2021 amid a broader tech/fintech selloff, so the value implied at completion in January 2022 (~US$13bn/~A$18bn based on Block's then share price) was well below the ~US$29bn (~A$39bn) figure quoted at announcement.
Widely covered as the largest-ever M&A deal involving an Australian company and one of the biggest fintech acquisitions globally. Commentary at announcement focused on Square's bet on BNPL and younger consumers; commentary by completion focused heavily on how much the deal's real value had shrunk as Block's stock price fell roughly 65% between announcement and close, illustrating the risk of all-stock, fixed-ratio consideration in volatile markets.
Deal mechanics
Morgan Stanley & Co. LLC (financial advisor to Square)
Goldman Sachs and Qatalyst Partners (financial advisors to Afterpay); Highbury Partnership (financial advisor to Afterpay's board)
All-scrip scheme of arrangement; each Afterpay ordinary share exchanged for 0.375 shares of Square (Block) Class A common stock; a small cash component (~1%) was payable in lieu of fractional shares for some shareholders. Fixed exchange ratio, so total consideration value moved with Square/Block's share price between announcement and completion.
Required US antitrust clearance and Australian Foreign Investment Review Board (FIRB) approval, plus approval from the Bank of Spain (Afterpay's European operations) and Afterpay shareholder approval. The ACCC opted not to conduct a public review. Afterpay shareholders approved the deal with 99.79% of proxy votes in favor at a meeting in December 2021; the scheme was approved by the Federal Court and completed January 31, 2022.