How has the Square share price performed since announcing the Afterpay deal?

Last month Square announced a deal to acquire Afterpay. How have its shares fared?

| More on:
Man looks frustrated looking at computer screen in an office

Image source: Getty Images

It has now been a month since Afterpay Ltd (ASX: APT) revealed that it was being acquired by US payments giant Square Inc (NYSE: SQ) for $39 billion in shares.

The all-scrip deal will see Afterpay shareholders receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay share they hold on the record date.

In light of this, unlike a takeover with a fixed offer price, the value of this takeover approach will ebb and flow with the Square share price.

As a result, Afterpay shareholders will no doubt be keeping a close eye on the performance of the Square share price between now and the closing of the deal.

How has the Square share price performed since announcing the Afterpay deal?

When the deal was announced at the start of August, the Square share price was US$247.26. This implied a transaction price of approximately $126.21 per Afterpay share at the time.

The good news is that the response to the takeover on Wall Street has been positive. This has led to the Square share price gaining 7.5% to US$247.26.

Based on this gain and current exchange rates, this implies a transaction price of approximately $134.76 per Afterpay share. This is broadly in line with where the Afterpay share price was trading at the close of play on Thursday.

What’s next?

Given that the transaction is expected to close during the first quarter of calendar year 2022, there’s still plenty of time for the Square share price to rise further (or fall).

Potential catalysts include Square’s third quarter results in November and Afterpay’s first quarter trading update in October. And if the deal isn’t closed by February, we can add in Square’s full year results and Afterpay’s half year results that are due that month.

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

Before you consider Afterpay, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Afterpay wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor 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 and has recommended AFTERPAY T FPO and Square. 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.

More on Mergers & Acquisitions