Time is Money for Afterpay Shareholders

Nervous times for Afterpay shareholders as the value of the Block deal continues to slide – it is down a massive $A13 billion in just over four and a half months – with still no final approval from the sole remaining regulator – the Bank of Spain.

Afterpay shareholders gave the deal a ringing endorsement at Tuesday’s annual meeting and yet the shares fell another 3.1% on the ASX on Wednesday to $88 after shares of its acquirer, Block fell again on Wall Street – down 2.7%.

Of the total votes tallied at Tuesday’s meeting, 99.79% supported what is likely to become Australia’s largest ever takeover deal, while just 0.05% were against it, and 0.16% were left open.

The vote comes just over a month after shareholders at Jack Dorsey’s Block, formerly Square, approved the issuing stock to complete the purchase.

The Bank of Spain’s go ahead is needed now because Afterpay’s Clearpay, based in Britain, bought Spanish BNPL outfit Pagantis in August last year for about $79 million.

Afterpay chair Elana Rubin told Tuesday’s meeting that both companies believe Spanish regulatory approval is all but sealed, and that the merger could still be finalised in the first quarter of 2022.

But the sliding share Block share price is driving down the value of the deal and the value of the offer – 0.375% of one Block share for every one Afterpay share.

At the time of the deal being announced in late July, the Square share price was $US247.26, which implied a transaction price of approximately $A126.21 for each Afterpay share. This valued the deal at approximately $US$29 billion or $A39 billion.

At this level the offer was an attractive 30.6% premium to the Afterpay share price at the time ($A96.66).

But that has now gone and the value of the deal is now around $A26 billion, or a third lower.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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