The Zip Co Ltd (ASX: Z1P) share price has been a very strong performer again on Wednesday.

In morning trade the payments company jumped a further 30% to a record high of $6.74.

This means the Zip Co share price is now up a massive 81% over the last two trading days.

Why is the Zip Co share price up 81% in two days?

The catalyst for this strong gain was a major announcement by the buy now pay later (BNPL) provider on Tuesday.

That announcement reveals that Zip Co has entered into an agreement to acquire New York-based buy now pay later provider QuadPay. This deal will see the company go head to head with Afterpay Ltd (ASX: APT) in the United States market.

What is QuadPay?

QuadPay is a leading, high growth, instalment provider disrupting the credit card industry. It has a strong focus on innovation and customer centricity.

It has 1.5 million customers and 3,500 merchants on its platform. From these it is currently generating annualised total transaction value of over $900 million and annualised revenue of $70 million.

As with Afterpay, QuadPay splits purchases into four interest free repayments over a period of six weeks.

How is Zip Co funding the deal?

Zip Co intends to fund the deal through the issue of shares. If shareholders vote in favour of the acquisition at an upcoming extraordinary general meeting, the company will issue approximately 119 million Zip Co shares to QuadPay stockholders. This will represent the equivalent of 23.3% of the issued share capital of Zip at completion.

This implies an enterprise value of approximately US$269 million or A$403 million.

That won’t be the only thing shareholders are voting on. To support its expansion into a U.S. retail market estimated to be worth $5 trillion per year, the company intends to raise funds via the issue of convertible notes.

Zip Co has entered into an agreement with CVI Investments, Inc., an affiliate of Susquehanna International, to raise up to $200 million by way of the issue of convertible notes and the exercise of warrants. These convertible notes have an initial conversion price of $5.5328, which was a 47.7% premium to Friday’s close price.

Is it too late to invest?

I think this acquisition is a big positive for Zip Co and the U.S. market could be a key driver of growth for the company in the future.

However, although I’m a big fan of the company, I feel its shares are looking fully valued now after this strong gain. As such, I would class Zip Co as a hold until it starts to demonstrate that it can crack the U.S. market like Afterpay has.

More reading

• Afterpay and these top ASX tech shares are on fire in 2020
• ASX 200 rises 0.3%, Zip rockets higher
• These ASX shares were among the best performers in May, surpassing the ASX 200
• Zip Co share price rockets 44% higher on U.S. expansion news
• The 3 ASX tech stocks that helped this fund manager outperform in May

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Infigen Energy Ltd (ASX: IFN) share price is flying higher this morning in response to a takeover bid.

Infigen is a provider of renewable energy. The company generates renewable energy from its owned wind farms in New South Wales, South Australia and Western Australia. It also sources renewable energy from third-party renewable projects.

Infigen holds energy retailing licenses in the National Electricity Market regions of Queensland, NSW, ACT, Victoria and SA.

Why the Infigen Energy share price is going gangbusters

This morning, UAC Energy announced a takeover bid for Infigen Energy. UAC is an investment holding company owned by the AC Energy Group (a subsidiary of Ayala Corporation in the Philippines) and UPC Renewables Australia.

UAC intends to make an off-market takeover bid of 80 cents per Infigen stapled security. This offer represents a 35.59% premium to yesterday’s closing price of 59 cents and implies total equity value of $777 million.

UAC pointed out that the Infigen share price has not closed higher than 80 cents since August 2017. It believes the offer price is attractive and “presents compelling value in the context of the price performance of Infigen stapled securities”.

Commenting on the attractiveness of the offer more specifically, UAC said: “The Offer is particularly attractive in the context of recent falls in electricity prices as well as Infigen’s relatively high debt servicing costs, its limited track-record in paying distributions and decisions taken by Infigen to suspend investment in a number of projects and defer the delivery of its development pipeline.”

UAC also announced this morning it has acquired an aggregate interest in 12.82% of Infigen stapled securities. This consists of beneficial ownership of 9.9% and economic interest in a further 2.92% via a total return swap.

What now?

The offer will be subject to a number of conditions, including approval from the Foreign Investment Review Board. However, it will not be subject to a minimum acceptance condition.

UAC intends to provide a copy of the bidder’s statement to Infigen securityholders “in due course”. The statement will contain key information such as reasons to accept the offer and instructions on how to accept the offer.

Infigen is yet to release an announcement of its own regarding the takeover bid. At the time of writing, the Infigen share price has rocketed 35.59% higher to 80 cents, on par with UAC’s offer price of 80 cents.

More reading

• Can ASX 200 retail shares outperform this year?
• How I’d invest my first $500 into ASX shares
• 1 ASX 200 tech share to buy and hold for a decade
• Why I think the Vanguard Australian Shares Index ETF share price is a buy
• The Zip Co share price just zoomed to a record high: Is it too late to invest?

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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