The combination of Zip and Sezzle is anticipated to result in 8.8 million customers and 60,500 merchants in the US


Sezzle agrees to be acquired by Zip. (Credit: Tung Nguyen from Pixabay)

Zip Co, a buy now, pay later (BNPL) provider, has agreed to acquire Sezzle, a fintech company listed on the Australian Securities Exchange (ASX), in an all-scrip deal worth around A$491m ($354.1m).

Sezzle, which is based in the US, is also a BNPL provider. The company is said to support small and medium businesses (SMB) with its omni-channel solutions.

It has developed a payments platform to boost the buying power of consumers by providing interest-free instalment plans at online stores as well as in-store locations.

Sezzle has built a product called Sezzle Up that enables users to buy now, pay later while consolidating their credit scores.

Zip is an Australian digital retail finance and payments platform which is also listed on the ASX. The company is said to offer point-of-sale credit and digital payment services across 14 regions around the world.

Its combination with Sezzle is expected to serve 8.8 million customers and 60,500 merchants in the US.

Zip co-founder and global CEO Larry Diamond said: “We are delighted to be bringing Zip and Sezzle together under a transformational transaction that is expected to deliver immediate scale and enhanced growth, which will support our path to profitability.

“Combining with Sezzle positions us as a leading global BNPL provider and prioritises our ability to win in the important U.S. market.”

As per the terms of the deal, Sezzle’s stockholders will exchange each of their shares for 0.98 of Zip’s shares. This will result in Zip’s shareholders owning nearly 78% of the combined entity, while Sezzle’s stockholders will hold the remaining 22% stake.

The proposed deal has been approved unanimously by the boards of directors of both companies.

Sezzle co-founder, executive chairman, and CEO Charlie Youakim said: “We are extremely excited about the opportunity to create a leader in the financial services industry by combining with Zip and its management team led by Larry and Pete.

“Paul and I believe it will be a great cultural fit for both our organisations and we’re excited to be part of Zip’s next chapter.”

The deal, which is subject to securityholder approvals for both firms, and other conditions, is expected to close by the end of the third quarter of 2022.