Zip to merge with US competitor Sezzle, announces $199m raise

Australian buy-now pay-later company Zip Co (ASX: Z1P) has today entered into a merger agreement with US-based rival Sezzle, valuing the target at approximately $491 million.

Concurrently, Zip has announced a $198.7 million capital raise and record December half results, with significant growth in key metrics including revenue, transaction volume and transaction numbers.

Under the proposed transaction, Sezzle stockholders will be entitled to receive 0.98 Zip shares for every share of Sezzle common stock owned, valuing the US company at a 22 per cent premium based on prices of both Sezzle ($1.78) and Zip ($2.21) as of 25 February.

Upon completion of the merger, expected to occur by the end of the third quarter of 2022, Zip shareholders will own 78 per cent of the combined group, while Sezzle stockholders will own the remaining 22 per cent.

The merger, unanimously approved by both companies’ boards of directors, will mean the combined company will have pro forma 8.8 million customers and 60,500 merchants in the US.

“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,” Zip co-founder and CEO Larry Diamond said.

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

“Pete and I have known Charlie [Youakim] and Paul [Paradis] (co- founders of Sezzle) for some time, and we’ve been impressed by what the Sezzle team has achieved. Their responsible lending, their Sezzle Up credit builder programme, as well as their B Corp certification is to be admired. We’re excited to welcome the entire Sezzle team on our journey, as we continue our mission towards being the first payment choice, everywhere and every day.”

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Source: Zip to merge with US competitor Sezzle, announces $199m raise