What does Afterpay’s takeover mean for the Zip (ASX:Z1P) share price?

Investors might soon be saying goodbye to Afterpay. But what could this mean for Zip?

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The Zip Co Ltd (ASX: Z1P) share price could soon be headlining the ASX-listed BNPL sector following Afterpay Ltd’s (ASX:APT) takeover offer yesterday morning.

Bye bye Afterpay?

According to the announcement, the transaction is expected to be complete in the first quarter of calendar year 2022.

Will the ASX-listed Afterpay we know and love be gone?

Mostly.

The takeover offer will see Afterpay shareholders own approximately 18.5% of the combined company.

In addition, Square plans to establish a secondary listing on the ASX via CHESS Depositary Interests (CDIs) to allow Australian investors to trade Square shares.

If investors still wanted to invest in Afterpay, they could do so through the soon-to-be listed Square shares.

However, you won’t be investing in the leading BNPL of old, but instead, a diversified financial services and digital payments business.

What does this mean for the Zip share price?

The Zip share price is currently the second largest ASX-listed BNPL player with a market capitalisation of approximately $3.7 billion.

If Afterpay’s takeover is successful, Zip should move up into the number one spot.

Again, investors should still be able to invest in Afterpay, but it would have to be through Square’s ASX-listed CDIs, which would provide you with exposure to its broader financial services and digital payments.

If investors wanted to invest solely in BNPL, the number one player would be the Zip share price.

Zip at a glance

Zip released its fourth-quarter results on 22 July, delivering classic triple-digit year-on-year growth across key metrics and a continued international expansion.

Zip has improved its global presence in the past 12 months, with a growing United Kingdom business, acquisitions to expand into Europe and the Middle East as well as successful launches into Canada and Mexico.

Despite its success, the Zip share price has largely been trading sideways since June 2020.

Should you invest $1,000 in Zip right now?

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Square, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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