Zip Co Ltd in early talks to acquire rival Sezzle Inc for undisclosed amount

On Tuesday, in a statement Sezzle Inc said, it is in talks larger Australian rival Zip Co Ltd  which aims to acquire it for an undisclosed amount.

With the news reaching the market, shares of the buy-now-pay-later company soared by 23%.

In two separate statement the companies said, negotiations were at an early stage and warned that there is no certainty that talks would lead to a deal.

U.S.-based Sezzle has a market capitalization of around $303.5 million (A$425 million), while Zip is valued at A$1.94 billion.

In the last two years, Zip has been active in the deal-making space as it tries to scale up with rivals including Block Inc’s Afterpay and Klarna.

These negotiations come at a time when the BNPL sector is seeing rapid consolidation after seeing a meteoric rise during the Coronavirus-induced COVID-19 pandemic with consumers preferring online shopping rather than visit brick-and-mortar stores.

Block, formerly called Square Inc, bought out sector bellwether Afterpay in one of Australia’s largest deal ever. 

Sezzle shares posted biggest jump since June 2021 in late-afternoon trade, while Zip added as much as 5.8% before turning negative in a broadly lower Australian market.

BNPL stocks, which soared during the early days of the pandemic, have fallen out of favour recently, as the prospect of interest rate hikes in the United States and Australia dent investor sentiment.

($1 = 1.4006 Australian dollars)

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