Touchcorp, Afterpay merger worth $500m
Melbourne-based fintech start-up Afterpay has announced a proposed merger with Touchcorp, in a deal set to create a new ASX-listed software and payments firm valued at $500 million.
Afterpay MD Nick Molnar said the two companies had been working together, and the proposed merger would help the combined entity rapidly scale into new markets and grow faster than otherwise possible.
Founded in 2014, Afterpay is a retail payments outfit that facilitates commerce between retail merchants and end customers, offering a “buy now, receive now, pay later” service that does not require end customers to enter into traditional loan arrangements or pay upfront fees to the group.
It landed on the bourse last April in a heavily oversubscribed bookbuild backed by legendary corporate raider Ron Brierley, and has since become one of the ASX’s hottest stocks. After an initial pricing at $1 a share the stock has been as high as $3.05, last August. It closed down 4.88 per cent yesterday at $2.34.
“Afterpay’s success over the past 12 months has been driven by building very strong retail relationships and engaging customers on a personal level,” Mr Molnar said. “Underpinning this strong growth has been the hard work of the Touchcorp team and we are pleased to work even closer together.”
Under the terms the new company will be owned about 64 per cent by Afterpay shareholders and about 36 per cent by Touchcorp shareholders, each on a fully diluted basis.
Afterpay’s current share price values the market cap at about $400m, while Touchcorp is valued at around $175m, including its 26 per cent stake in Afterpay. If approved, the deal will see the new entity listed with current Afterpay chairman Anthony Eisen serving as executive chairman and Nick Molnar as managing director.
Touchcorp chief financial officer Nadine Lennie will hold the same position, as will its head of technology Jason Van.
Afterpay executive chairman Anthony Eisen said the merger was a natural evolution of what was already a close relationship between the two businesses, especially given the importance of Touchcorp’s technology to Afterpays’ growth.
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Source: Touchcorp, Afterpay merger worth $500m – The Australian