The Zip Co Ltd (ASX: Z1P) share price is rising after revealing it’s going to acquire two buy now, pay later global players.
What are Zip’s acquisitions?
It’s going to buy the rest of European BNPL business Twisto Payments and Zip will also acquire the rest of UAE-based BNPL company Spotii.
After successfully expanding to the US and the UK, Zip wants to expand to two more regions.
Management said that these acquisitions align with Zip’s global expansion plans and the rapidly accelerating global BNPL opportunity.
Zip said that it is building a reputation of identifying, completing and integrating strategic acquisitions.
The company believes that both Twisto and Spotii can leverage the benefits of being part of a global payments organisation.
One of the most useful things about the Twisto acquisition is that its license can be passported to all 27 member states of the EU. Over 1 million customers have transacted on the Twisto platform. It has an annual run rate of $12 million revenue and $230 million total transaction value (TTV), with 14,000 merchants.
Spotii is a leading player in the Middle East, it is operational in the UAE and Saudi Arabia.
Zip believes that these acquisitions will give the company the ability to respond to the increased demand from merchants for a single global BNPL solution across multiple markets with a consistent service.
Zip said that it has taken a similar approach to these two businesses as it did with Quadpay. The ASX BNPL business initially made a small investment to ensure that there’s the right cultural fit and management alignment, stress testing the business plan, identifying synergies and planning for integration.
The acquisitions have a combined enterprise value of $180 million, with a transaction consideration of $160 million – Zip already owns some of both companies. The deal will be funded by either cash and/or Zip shares, depending on what the ASX share decides.
Summary thoughts on the Zip share price
These moves are smart by Zip. It gets it into large markets a lot quicker than if it were to do it by itself. I’m not sure if a multi-brand approach is the best tactic or not, time will tell.
I prefer Zip to Afterpay Ltd (ASX: APT), but I don’t know how profitable the sector can be in the future with more competition. So there are other ASX growth shares that appeal to me more.
