Zip Co. is set to acquire Sezzle for around A$491 million ($352.63 million) in an all-share deal which will combine two Australia-listed buy-now-pay-later (BNPL) players.
«We are delighted to be bringing Zip and Sezzle together under a transformational transaction that is expected to deliver immediate scale and enhanced growth, which will support our path to profitability,» Larry Diamond, co-founder and global CEO of Zip, said in a statement.
«Combining with Sezzle positions us as a leading global BNPL provider and prioritises our ability to win in the important U.S. market,» said Diamond.
Valuing Sezzle at Premium
Under the deal, for every Sezzle share held, shareholders will receive 0.98 Zip share, valuing Sezzel at a 22 percent premium based on Friday’s share prices, the companies said in a press release Monday.
At the same time, Zip will also place A$148.7 million in shares to eligible institutional, professional and sophisticated investors, and provide a share purchase plan to eligible shareholders in Australia and New Zealand to raise up to A$50 million, the release said.
On completion of both transactions, Zip shareholders will own around 78 percent of the combined group, and Sezzle shareholders will have the remainder, the statement said. The merger is expected to be completed by the end of the third quarter, the filing said.
BNPL Growth
Zip is a global BNPL player, with around A$4.5 billion in total transaction value in the six months ended 31 December, up 93 percent from the year-ago period; it also offers digital retail finance and payments.
Sezzle had total transaction volume of $2.3 billion in 2021, the release said. U.S.-based BNPL player Sezzle targets small and medium-sized businesses, offering interest-free instalment plans at online and offline stores.
The addressable retail market for BNPL globally is $25 trillion, according to data from eMarketer and Ibis World, cited by the companies. The U.S. BNPL payment segment is expected to grow 66.5 percent in 2022 to reach around US$82 billion, according to data from a Research and Markets report published in mid-February.
