Afterpay (ASX:APT) share price on watch after Square takeover update

Here’s the latest on the Afterpay-Square deal…

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The Afterpay Ltd (ASX: APT) share price will be one to watch on Thursday.

This follows news that its takeover by Square has taken a major step forward this morning.

Why is the Afterpay share price on watch?

The Afterpay share price could be on the move today after the payments company released an update on Square’s takeover proposal.

According to the release, Square shareholders have now approved the issuance of Square Class A common stock (including the shares underlying CHESS Depositary Interests) to Afterpay shareholders as contemplated by the scheme implementation deed the two parties entered into in August.

Approval for this issuance from Square shareholders was one of the major conditions of the transaction.

As a result, Afterpay can now push ahead with things. This includes holding its first court hearing later today. After which, the company expects to release its scheme booklet tomorrow, subject to court approval and following registration with the Australian Securities and Investments Commission.

If all goes to plan, Afterpay expects the transaction to close during the first quarter of calendar year 2022.

What is the current value of the takeover?

In August, the two parties agreed an all-scrip deal, which 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.

Based on the current exchange rates and the latest Square share price of $252.48 (A$338.92), this equates to $127.10 per Afterpay share.

Due to the Square share price trading sideways since announcing the deal, this is broadly in line with the takeover price at the time the offer was made. It also represents a premium of 4.5% to the current Afterpay share price of $121.53.

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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.

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