In the months since Afterpay Ltd (ASX: APT) announced it would be acquired by the US payments giant Square Inc (NYSE: SQ), interest has certainly waned. But the 2 August announcement remains one of the most significant announcements of any ASX 200 company in 2021 so far.
Afterpay was, after all, one of the ASX 200's hottest growth shares. After giving investors neck-cracking returns for most of 2017, 2018, and 2019, Afterpay shares had one of the most dramatic slumps of any ASX 200 share at the onset of the coronavirus pandemic. Fresh from fetching a new (at the time) all-time high of around $39 back in January 2020, by late March Afterpay had fallen to under $9 a share.
But its recovery from the COVID-induced market crash last year was even more dramatic. By February 2021, this company had hit an all-time high of $160.05 a share, a whopping return of more than 1,600% from its 2020 low.
But ever since the announcement in August, the Afterpay share price hasn't done all that much. Well, by Afterpay's standards that is. At the closing share price of $117.39 that this buy now, pay later (BNPL) pioneer finished up at today, it has lost roughly 8.5% since early August.
This might have something to do with Square's takeover offer itself. The payments company offered up an all-scrip deal for Afterpay, putting an offer of 0.375 Square shares for every Afterpay share owned on the table.
That intrinsically tied the Afterpay share price to that of Square. It's perhaps no surprise then to discover that the Square share price has also fallen by roughly 6% since the takeover offer was announced. It's currently at US$233.02.
When will Afterpay shares go gentle into that good night?
But that was August, and we are now in November. So what's going on with Afterpay? When will the BNPL leader's shares depart the ASX for good?
Well, unfortunately, we don't yet know exactly. Afterpay announced on 4 November that Square shareholders have given the deal the green light. The company stated then that it "expects the transaction will close in the first quarter of 2022". So that's all we have for now.
However, when the deal does eventually close, the company has given us an idea of what happens next. At the time of the acquisition announcement, Square stated that existing Afterpay investors will be able to choose to have their Afterpay shares converted into NYSE-listed Square shares. If any Afterpay investors do not wish to receive these US-listed shares, they can elect to receive CHESS Depositary Interests (CDIs) for Square instead.
A CDI is a secondary ASX listing of a foreign company. It essentially entitles the investor to ownership of a foreign-listed company on a local stock exchange. Thus, Square shares will effectively join the ASX (and be priced in Australian dollars) when the deal goes ahead.
All may be quiet on the Afterpay front at present. But you can circle the first quarter of next year as the next chapter in this ever-exciting company's life.
At the current Afterpay share price of $117.39. this company has a market capitalisation of $33.49 billion.
