Zip CO (ASX:Z1P) - CEO, Larry Diamond
CEO, Larry Diamond
Source: Zip Co
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  • Zip Co (Z1P) has officially announced it will acquire fellow buy now, pay later stock Sezzle (SZL) for an implied value of $491 million
  • Rumours were circulating regarding the merger of the competitors, however Zip has now put the speculation to rest, saying the deal is expected to deliver significant growth
  • Zip Co-Founder and Global CEO Larry Diamond says the merge ” positions us as a leading global BNPL provider and prioritises our ability to win in the important US market”
  • To strengthen its balance sheet and position it for growth, Zip has launched a $148.7 million placement and subsequent share purchase plan to raise up to a further $50 million
  • Zip Co and Sezzle are both in a trading halt with Z1P shares last trading at $2.21 and Sezzle’s at $1.78 on Friday, February 25

Zip Co (Z1P) and fellow buy now, pay later stock Sezzle (SZL) have entered a definitive agreement which will see the two companies merge.

Through the acquisition, Sezzle stockholders may receive 0.98 Z1P shares for every Sezzle share owned. The total consideration represents an implied value of Sezzle of about $491 million, valuing Sezzle at a 22 per cent premium based on its last traded price of $1.78 and Zip’s of $2.21.

After media speculation, Zip Co confirmed last month that it intended to acquire the fintech stock in an effort to bring together ‘industry-leading’ buy now, pay later (BNPL) talent.

“We are delighted to be bringing Zip and Sezzle together under a transformational transaction that’s expected to deliver immediate scale and enhanced growth, which will support our path to profitability. Combining with Sezzle positions us as a leading global BNPL provider and prioritises our ability to win in the important US market,” Zip Co-Founder and Global CEO Larry Diamond said.

“Pete and I have known Charlie and Paul (Sezzle co-founders) for some time, and we’ve been impressed by what the Sezzle team has achieved. Their responsible lending, their Sezzle Up credit builder program, as well as their B Corp certification is to be admired.”

Sezzle Co-Founder, CEO and Executive Chairman Charlie Youakim held the same sentiment as Mr Diamond.

“Paul and I believe it will be a great cultural fit for both our organisations and we’re excited to be part of Zip’s next chapter. I believe the transaction will position us to win in the US and globally,” Mr Youakim said.

Under the deal, Zip has chosen to expand its board of directors to nine members to include three members appointed by Sezzle. These will be Mr Youakim as an Executive Director, Paul Lahiff and Mike Cutter as non-executive directors, and an independent director mutually agreed between Zip and Sezzle.

The transaction is expected to close by the end of the September quarter.

Zip Co is also launching an equity raise to raise up to almost $200 million.

The fintech company announced a $148.7 million fully underwritten placement to institutional, professional and sophisticated investors. Over 78 million shares will be issued at $1.90 each which marks a 14 per cent discount to Zip’s last closing price of $2.21 per share.

Zip said the placement will strengthen its balance sheet and give it more capital to meet sustainable growth initiatives.

In addition, it will aim to raise another $50 million through a share purchase plan (SPP). The non-underwritten SPP allows eligible shareholders to apply for up to $30,000 worth of new Zip shares without incurring broker or transaction costs. The issue price will reportedly be lower than the placement price.

Zip Co and Sezzle are both in a trading halt with Z1P shares last trading at $2.21 and Sezzle’s at $1.78 on Friday, February 25.

Z1P by the numbers
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