The Sezzle Inc (ASX: SZL) share price is tumbling this morning as what was once a $491 million merger deal is binned.
Sezzle and its former suitor, buy now, pay later (BNPL) giant Zip Co Ltd (ASX: ZIP), have abandoned their plan to join forces.
At the time of writing, the Sezzle share price is 27 cents, 34.94% lower than its previous close.
Let's take a closer look at the latest news to drag on this ASX BNPL share.
Sezzle share price plummets on transaction termination
The termination of the deal is mutual and effective immediately. A release from Zip noted its dumping was "in light of current macroeconomic and market conditions".
Sezzle co-founder, executive chair, and CEO Charlie Youakim said the company will keep pushing towards profitability and free cash flow.
Youakim said:
While we were excited by the potential of this transaction, our board and management team are laser-focused on our strategy and execution … [We] believe this is the best outcome for our shareholders.
The share prices of both Sezzle and Zip have plummeted more than 75% since the merger was announced in February.
The previously agreed-upon takeover deal would have seen Sezzle shareholders receive 0.98 Zip shares for every Sezzle stock held.
Zip has agreed to pay Sezzle US$11 million to cover the costs associated with the dumped transaction.
Sezzle provides quarterly earnings update
The Sezzle share price may also be responding to the company's preliminary unaudited results for the June quarter released today.
The BNPL provider's underlying merchant sales are expected to come in at between US$415 million and US$420 million for the three months ended 30 June.
It also expects to report between US$28.5 million and US$29.5 million of income for the quarter. Considering transaction-related costs, that range falls to between US$8.5 million and US$9.5 million.
Sezzle ended the quarter with approximately US$71 million of cash and availability on its line of credit facility.
