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Key points
- Today is the last day on the ASX for Afterpay shares
- Tomorrow, Square CDI shares will take their place
- But what will happen to the Afterpay founders' 19.9 million shares?
If Nick Molnar and Anthony Eisen weren't feeling at least a little bit sentimental today, they wouldn't be human. That's because today, 19 January, is the last day that shares of the company they founded together back in 2014 will trade on the ASX share market. It's also the last day these two gentlemen will technically own Afterpay Ltd (ASX: APT) shares.
The 'scheme of arrangement' that these two founders helped design, which will enable Afterpay to be acquired by US payments giant Block Inc (NYSE: SQ), comes into effect tomorrow. Block was formerly known as Square Inc until a name change late last year.
Block shares set to join the ASX boards tomorrow
Afterpay first announced the Block merger back in August last year. But it only overcame its final regulatory hurdle earlier this month. That was when the deal got the green light from the Bank of Spain.
Now that the scheme is going ahead full steam, Afterpay shares are scheduled to leave to the ASX tomorrow. In their place, a secondary CHESS depository interest (CDI) listing of Block will join the ASX (ticker code to be SQ2). In the process, Block will become one of the ASX's largest holdings. These will only trade on a 'deferred settlement' basis, at least until the scheme is formally implemented on 1 February.
Afterpay is celebrating its last day on the ASX in a rather disappointing manner. The company has lost 1.09% so far today (at the time of writing) and is trading at $67.21 a share. That's more than 57% off of the company's all-time high of $160.05 that we saw back in early 2021.
According to a November ASX release, Molnar and Eisen hold approximately 19.9 million shares of Afterpay each. So what is going to happen to this substantial number of Afterpay shares now that the company is disappearing into the ether?
What will happen to Eisen and Molnar's Afterpay shares?
Well, under the terms of the Afterpay-Block marriage, Afterpay shareholders are set to receive a fixed ratio of 0.375 shares of Block for every share of Afterpay owned. And that includes Messrs Eisen and Molnar. And that means when the deal is finalised, the two Afterpay co-CEOs will instead own roughly 7.46 million shares of Block.
But what now for these two gentlemen? After all, some might think it a shame if arguably two of the most successful ASX entrepreneurs of the 21st century so far were to ride off into the sunset.
Well, that won't be the case, if Afterpay's initial announcement of the merger is to be believed. Back in August, the company had this to say regarding Eisen and Molnar's future plans once the marriage is complete:
Afterpay's Co-Founders and Co-CEOs will join Square [Block] upon completion of the transaction and help lead Afterpay's respective merchant and consumer businesses, as part of Square's Seller and Cash App ecosystems. Square will appoint one Afterpay director as a member of the Square Board following closing.
So there you have it. If you're an Afterpay shareholder that is set to receive Block shares tomorrow, you can be rest assured that Eisen and Molnar will still be pulling some strings behind the scenes at Block.
