The Zip Co Ltd (ASX: Z1P) share price is riding a revival in the buy now, pay later (BNPL) space today. This comes after Afterpay Ltd (ASX: APT) announced the receipt of a $39 billion takeover bid from US payments giant Square Inc.
At the time of writing, shares in Zip are trading 8.4% higher to $7.20. The sizeable bid for Australia’s biggest BNPL player has injected optimism back into the sector on Monday.
Let’s take a look at the latest developments.
Afterpay acquisition
This morning, Afterpay announced to the market that US-based Square will acquire it for $39 billion in an all-scrip deal. That means Afterpay shareholders will receive 0.375 shares in Square if the deal goes through.
The monumental deal has revitalised investor interest in the sector, with shares in other ASX-listed BNPL companies climbing. One notable company experiencing a significant lift in its share price is Aussie competitor Zip.
Today’s attention to Zip might be due to its own acquisition rumours last month. According to reports, Swedish BNPL leader Klarna took a 4% strategic stake in the company. However, this has not been confirmed by either entity.
Following Afterpay’s acquisition news, investors might be speculating over the possibility of Zip being the next gobbled-up competitor.
Zip share price in focus
Expectations of consolidation have come with increased competition in the industry. For example, rumours arose last month of US tech behemoth Apple planning to enter the fray. Similarly, PayPal has been pushing its instalment payment offering in Australia.
For context, these are not small companies. Apple is the biggest publically-listed company in the world with a market capitalisation of US$2.41 trillion. Likewise, Paypal commands a US$323.7 billion valuation. Understandably, with such giants ramping up competition, their smaller competitors are looking for partnerships to make them more formidable.
Based on its current share price, Zip’s market capitalisation is $4.01 billion.
The post Zip (ASX:Z1P) share price surges on news of Square acquiring Afterpay appeared first on The Motley Fool Australia.
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More reading
- Here’s why ASX tech shares are up 6% on Monday
- ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
- Why did the Zip (ASX:Z1P) share price tumble 12% in July?
- Why Afterpay, Redbubble, & Zip shares are sinking on Friday
- Own Zip (ASX:Z1P) shares? Here’s what to look for during reporting season
Motley Fool contributor Mitchell Lawler owns shares of AFTERPAY T FPO and Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Apple, PayPal Holdings, Square, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Apple and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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