PI Global Investments

Zip-Sezzle BNPL deal falls through as rising rates hit consumer finance firms

Zip logo is seen on a smartphone in front of displayed same logo in this illustration taken January 25, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Register now for FREE unlimited access to Reuters.com

July 12 (Reuters) – Australian buy-now-pay-later (BNPL) firm Zip Co Ltd dropped its plan to buyout U.S. rival Sezzle Inc , the companies said on Tuesday, adding to the list of fallen deals as rising interest rates hurt consumer finance firms.

As part of terminating the deal, which is effective immediately, Sezzle would receive $11 million from Zip, the companies added in a joint statement.

BNPL firms have seen their market value rapidly shrink over the past months as interest rate hikes to tame supercharged inflation fuelled concerns about a slowdown in consumer finance.

Register now for FREE unlimited access to Reuters.com

This has led to Australia’s Latitude Group pull back its buyout offer for Humm’s BNPL business, and fellow BNPL firm Openpay to pause its operations on the U.S. market. read more

Zip cited “current macroeconomic and market conditions” as a reason for pulling away from the deal, after saying in June “the acquisition of Sezzle remains on track”.

The Australian BNPL firm added that it continued to expect to deliver group profitability during FY2024.

“We remain dedicated to driving toward profitability and free cash flow and believe this (deal termination) is the best outcome for our shareholders,” said Charlie Youakim, chief executive officer of Sezzle.

Sezzle, which was valued at A$491 million ($330.34 million) by Zip while announcing the buyout in February, lost nearly 82% of its value to A84.9 million, as of Monday’s close. read more

($1 = 1.4863 Australian dollars)

Register now for FREE unlimited access to Reuters.com

Reporting by Indranil Sarkar in Bengaluru; Editing by Rashmi Aich

Our Standards: The Thomson Reuters Trust Principles.

Source link

Related posts

Abu Dhabi’s Chimera buys majority of Egypt’s Beltone Financial


Lic Housing Finance, Infosys, Yes Bank, Indigo And More


Ship Finance International (SFL) Q2 2022 Earnings Call Transcript


Leave a Comment


Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.

    100% secure your website.