Square up 10%. What does this mean for the Afterpay (ASX:APT) share price?

Why surging Square shares could spell good news for the Afterpay share price.
The post Square up 10%. What does this mean for the Afterpay (ASX:APT) share price? appeared first on The Motley Fool Australia. –

The Afterpay Ltd (ASX: APT) share price will be in focus again today following the jump in Square Inc (NYSE: SQ) shares overnight. This came following the big news yesterday that the buy now, pay later giant has received a $39 billion takeover proposal from Square.

Why Square could impact the Afterpay share price today

Square values Afterpay at approximately US$29 billion, however, it is expected to be paid entirely in Square Class A common stock.

Square also noted that it may elect to pay 1% of the total consideration in cash.

Under the terms of the takeover, Afterpay shareholders will receive a fixed exchange ratio of 0.375 Square shares for each Afterpay share they hold on the record date.

The reference price used in the takeover announcement was US$247.26, Square’s last closing price on Friday 30 July.

But the transaction is not yet finalised, and the Square share price could wind up being materially different to the US$247.26 reference price used in the takeover announcement.

Square surges overnight

The Square share price surged 10.16% on Monday night to US$272.38.

Under the fixed exchange ratio of 0.375, this would represent around US$102 worth of Square stock.

Converting this figure back into Australian dollars at the current exchange rate, this would, theoretically, value the Afterpay share price at approximately $138.42.

What else should investors know?

Investors should note that the transaction is still subject to a number of conditions.

These include regulatory approvals as well as approval from both Square and Afterpay shareholders.

Square will also need approval for the quotation of new securities on the New York Stock Exchange and its planned CHESS Depositary Interest (CDIs) on the ASX.

In addition, Afterpay will seek a receipt of confirmation from the Australian Taxation Office for the availability of scrip-for-scrip capital gains tax rollover relief, ensuring the transaction can be made on a tax-free basis for Afterpay shareholders in Australia.

While both companies will be busy with getting their approvals and paperwork in order, the bottom line is that the Afterpay share price will, again, be ‘squarely’ in the spotlight on Tuesday.

The post Square up 10%. What does this mean for the Afterpay (ASX:APT) share price? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Afterpay right now?

Before you consider Afterpay, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Afterpay wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

Here are 4 sure-fire ways to catch the next 10-bagger

Why the Afterpay (ASX:APT) share price can still rise (and fall) after the Square deal
What does Afterpay’s takeover mean for the Zip (ASX:Z1P) share price?

5 things to watch on the ASX 200 on Tuesday

Square takeover sees surge in the Afterpay share price

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!