Zip to acquire BNPL competitor Sezzle in $491 million deal

Aussie BNPL giant Zip is set to acquire SME-focused competitor Sezzle, in a deal valued at $491 million.

The all-scrip transaction will see Sezzle shareholders receive 0.98 Zip shares for each Sezzle share. Based on the trading price of Zip shares, that means the deal values Sezzle at approximately $491 million.

On the closing of the deal, Sezzle shareholders will own approximately 22% of the combined company.

While listed on the ASX, Sezzle is headquartered in the US, and focuses on the SME market in the States.

The business is also a registered B Corp, with a mission to “financially empower the next generation”.

The news follows speculation that Zip may be fielding a takeover bid of its own, from a foreign buyer, after it delayed the release of its half-yearly results.

The transaction has been unanimously approved by both companies’ boards of directors, and is expected to be finalised in Q3 of the 2022 calendar year.

In a statement, Zip co-founder and chief executive Larry Diamond said the acquisition would “deliver immediate scale and enhanced growth”, while putting the fintech on a path to profitability.

While Zip reported record revenues of $302.2 million for the six months ending December 31, up 89% year-on-year, gross profits were down by 23%.

The business reported a loss after tax of some $214.3 million.

“Combining with Sezzle positions us as a leading global BNPL provider and prioritises our ability to win in the important US market,” Diamond added.

Charlie Youakim, co-founder and chief of Sezzle, echoed that the transaction will support expansion into the US, while adding that the acquisition is a “great cultural fit for both organisations”.

Combined, Zip and Sezzle are available at some 60,500 merchants in the US, and are used by about 8.8 million customers.