The Zip Co Ltd (ASX: Z1P) share price is up more than 4%, it has completed the acquisition of European business Twisto Payments.
Zip acquires Twisto
After shareholder approval at Zip’s annual general meeting (AGM) on Thursday, it has completed the acquisition of the remaining shares of Central European buy now, pay later business Twisto Payments.
Under the terms of the acquisition, Zip has issued 17,454,987 new shares to the securityholders of Twisto. That comprises the ‘upfront’ consideration, approved by Zip shareholders.
This upfront consideration paid by the company for the Twisto acquisition is approximately $115.8 million. Those new shares were issued at a price of $6.61, based on the average price over the prior 30 days.
Zip shareholders have also approved to issue up to a maximum of 4.55 million new shares to Twisto Payments shareholders as the ‘holdback consideration shares’ by no later than the 4-year anniversary of completion.
Why is Zip interested in Twisto Payments?
Zip said the acquisition provides Zip with a gateway to one of the world’s largest e-commerce markets and access to all 27 member states of the European Union (EU).
Founded in 2013, Twisto has served almost one million customers, across 22,000 merchants and is a leading buy now, pay later platform in Central Europe.
Zip said that the company has developed a unique omnichannel payments platform, giving customers full control and the freedom to pay for their everyday purchases over short and longer term installments.
Some of Twisto’s flagship merchants include KFC, Pizza Hut, Secret Escapes, Gap, New Balance, Delivery Hero, Takeaway, Yves Rocher and Under Armour.
Final thoughts
Buy now, pay later operators are currently in a land grab phase of expansion. The bigger their processing volume, the more likely they are to be the choice of merchants and consumers alike.
The Zip share price is a lot lower than its 2021 highs – down 24% from mid-August 2021 and down 57% from mid February 2021.
Regulators are now thinking that it could be a good idea to allow merchants to add surcharges onto customer purchases, if they want to. This could make BNPL much less attractive to customers if merchants decide to wrestle back some of their margin.
There are also large players entering the BNPL space which could hamper Zip’s growth like Commonwealth Bank of Australia (ASX: CBA), PayPal, Square and potentially Apple.
I think there could be more compelling ASX growth shares around which are more likely to make good profit in the coming years.
