Zip (ASX:Z1P) share price higher on European and Middle East expansion news

The Zip Co Ltd (ASX:Z1P) share price is on the move on Monday morning after announcing its expansion into Europe and the Middle East…

| More on:
A businessman holding a world globe in one hand, representing global investment.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Zip Co Ltd (ASX: Z1P) share price has started the week very strongly.

In early trade, the buy now pay later (BNPL) provider's shares are up a sizeable 5% to $7.41.

Why is the Zip share price charging higher?

Investors have been buying Zip's shares this morning following the release of an expansion update.

According to the release, the company plans to enter the European and Middle East markets after acquiring the remaining shares of European BNPL provider Twisto Payments and UAE-based BNPL provider Spotii. Zip had previously bought stakes in both companies.

Management notes that the transactions align with Zip's global expansion plans and the rapidly accelerating global BNPL opportunity.

It also notes that, as demonstrated through the acquisition of QuadPay, Zip is building its playbook in successfully identifying, completing, and integrating strategic acquisitions. It believes that Twisto and Spotii are now well-positioned to leverage the benefits of this competency and the synergies of a truly global payments organisation.

In addition, Twisto and Spotii are already integrated into Zip's global Single Merchant Interface (SMI), which provides merchants instant access to 11 countries across five continents.

Twisto Payments

Zip will purchase the remaining shares in Twisto that it does not already own for an amount of ~89 million euros (~$140 million). The completion of the acquisition is expected to occur in the fourth quarter of calendar year 2021.

The acquisition gives Zip access to 27 European Union (EU) countries. Given that the EU is the world's second-largest ecommerce market with $1.1 trillion annual volume, this is a lucrative market to operate in.

The release explains that over 1 million customers have transacted on the Twisto platform, with an annual run-rate of $12 million revenue and $230 million total transaction value (TTV), and 14,000 merchants.

Flagship merchants in the region include Delivery Hero, Pizza Hut, Gap, New Balance, Yves Rocher and Under Armour. It also has a robust pipeline of sizable merchants thanks to a regional partnership with global fintech leader PayU.

Zip Co-founder and Chief Executive Officer Larry Diamond said: "The acquisition of Twisto shows our commitment to global growth and follows our 'Coalition of Founders' model, where we back strong founders with a shared vision and deep cultural alignment in our quest for global payments coverage. We are very much looking forward to adding this strategic geography to our growing footprint and fulfilling global merchant demand. We have been impressed by the Twisto team, their deep customer focus and product set and look forward to working closely with them to deliver on the opportunities we jointly have in front of us."


Zip will purchase the remaining shares in Spotii that it does not already own for US$16 million (~$21 million), implying an enterprise value of ~US$20 million (~$26 million). The completion of the acquisition is expected to occur in third quarter of 2021.

Management notes that the Middle East is one of the fastest-growing ecommerce regions globally, with online spend increasing at 25% annually.

Spotii was only founded in 2020 but has shown early traction with 650 merchants already integrated into the platform. This includes flagship regional brands such as Jashanmal and Danube Home. Total transaction volume has grown at an average of 90%+ month-on-month since inception.

Mr Diamond commented: "The Spotii acquisition is an important step in Zip's global expansion and international strategy, with Ecommerce in the Middle East on a significant upward trajectory. We have been working with Spotii since our initial investment in December 2020 to broaden our understanding of the BNPL opportunity in the region and have a number of exciting global merchants we are looking forward to activating in the coming months. We also believe there is a large untapped opportunity to bring BNPL to emerging markets where cash on delivery remains a significant merchant challenge, and where the digitisation of retail accelerates."

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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A woman ponders a question as she puts money into a piggy bank with a model plane and suitcase nearby.
Share Market News

If I invest $10,000 in Qantas shares, how much passive income will I receive in 2024?

Here's what analysts are predicting from the airline operator.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

These ASX 200 shares could rise 20% to 50%

Big returns could be on the cards according to analysts.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Value Investing

Looking for ASX value shares? Here's 1 I'd buy and 1 I'd avoid!

It's not an easy exercise to identify which stocks are undervalued and which ones are simply terrible. Here's an example…

Read more »

A young girl looks up and balances a pencil on her nose, while thinking about a decision she has to make.

Will I be buying Zip shares now the company has turned a profit?

Is now the right time to buy this BNPL stock -- or not?

Read more »

a man with hands in pockets and a serious look on his face stares out of an office window onto a landscape of highrise office buildings in an urban landscape

1 ASX dividend stock down 55% to buy right now

Here's why I think this beaten-up stock could be an opportunity.

Read more »

Three analysts look at tech options on a wall screen
Share Market News

Here's how the ASX 200 market sectors stacked up this week

ASX tech shares are on fire, leading the 11 market sectors for a third consecutive week.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Market News

Here are the top 10 ASX 200 shares today

The ASX 200 clocked a few new all-time highs this Friday.

Read more »

A young couple stands next to a real estate agent in an empty apartment they are inspecting
Share Market News

How ASX shares vs. property performed in February

We reveal the property price growth for each city and regional market and the top 5 risers of the ASX…

Read more »