Sezzle will be paid $11m as compensation from Zip for covering its legal, accounting, and other costs related to the proposed transaction
Zip Co, an Australian buy now, pay later (BNPL) provider, has terminated its previously announced A$491m ($331m) acquisition of fintech company Sezzle owing to the current macroeconomic and market conditions.
As part of the mutual scrapping of the deal, Sezzle will be paid $11m from Zip for compensating its legal, accounting, and other costs related to the proposed transaction.
Sezzle, which is based in the US, is listed on the Australian Securities Exchange (ASX). It is also a BNPL provider, which offers omni-channel solutions to small and medium businesses (SMB).
Zip is a digital retail finance and payments platform, which is also listed on the ASX. It is said to offer point-of-sale credit and digital payment services in 14 regions around the world.
Its combination with Sezzle was expected to cater to 8.8 million customers and 60,500 merchants in the US.
Sezzle co-founder, executive chairman, and CEO Charlie 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 remain dedicated to driving toward profitability and free cash flow and believe this is the best outcome for our shareholders.”
Zip said that it continues to be focused firmly on its strategic plan and expediting its path to profitability. The company claimed that its underlying business has been strong with consistent growth in both customers and transaction volume across key markets, and a robust pipeline of enterprise merchants joining the platform.
It further stated that the US will continue to be a core market and a focus area, and a substantial opportunity for the business.
Zip board chair Diane Smith-Gander said: “We believe that mutually terminating the merger agreement with Sezzle at this time is in the best interests of Zip and its shareholders, and will allow Zip to focus on its strategy and core business in the current environment.”