Afterpay-Block mega billion dollar deal gets Bank of Spain approval

Block has cleared the final hurdle in its multi-billion dollar takeover of Afterpay, with the Bank of Spain giving the deal its final approval.

Afterpay co-founders and co-CEOs Nick Molnar and Anthony Eisen have now completed their deal with jack Dorsey’s Block (formerly Square).

Buy now pay later giant Afterpay’s takeover by US tech entrepreneur Jack Dorsey’s Block (formerly Square) has cleared the final hurdle with the Bank of Spain granting its approval to the multi-billion dollar merger.

Afterpay told investors Block received approval for the acquisition by Lanai (AU) 2 Pty Ltd, an indirect subsidiary of Block.

“Now that Bank of Spain approval has been received, the Scheme is fully unconditional and will be implemented without the need for further shareholder or court approval,” Afterpay said.

“Afterpay, its leadership and team have shown that groundbreaking fintech innovation built in Australia can reach global proportion,” Afterpay chair Elana Rubin said.

She said the Afterpay is excited at the prospect of beginning an extraordinary next phase with Block and looks forward to implementation on February 1.

“On behalf of the Board and management, thank you to our shareholders, customers, merchants, broader stakeholders and regulators, for recognising the potential of this incredible company and for sharing in the vision of fairness and financial freedom for all,” she said.

Afterpay shares last traded at $73.51.

Shares in Afterpay and Block have fallen more than 40 per cent since the scrip deal was announced in August, then valued at $39bn ($US29bn).

Afterpay’s ASX shares are expected to be suspended from trade at the close on January 19.

The approval also triggered a quick note from equities analysts at Macquarie Research who said the BoS approval “creates a small window of opportunity”.

“Since the announcement of the proposed acquisition APT-AU shares have been trading largely in line with SQ-US (Square/Block’s US share price), since the beginning of 2022 however the discount gap has widened, in our view reflecting potential risk that the deal would not go ahead due to delays from BoS approval.

“This has created a short-term opportunity for APT shareholders as the gap between the two should now close as all regulatory approvals have now been received,” the note to clients said.

“APT’s share price should trade in line with SQ going forward and whilst the story is a bit more complicated now vs when the proposed acquisition was initially announced in terms of the BNPL operating environment, the potential impact to Cash App from waning government payments, and tech multiples coming in on higher rate expectations, SQ shares are still quite undervalued in our view.”

Macquarie retained its outperform rating on Afterpay.