- July 12, 2022
- Posted by: Bastion team
- Category: World News
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July 12 (Reuters) – Australian buy-now-pay-later (BNPL) firm Zip Co Ltd dropped its plan to buyout U.S. rival Sezzle Inc , the companies said on Tuesday, adding to the list of fallen deals as rising interest rates hurt consumer finance firms.
As part of terminating the deal, which is effective immediately, Sezzle would receive $11 million from Zip, the companies added in a joint statement.
BNPL firms have seen their market value rapidly shrink over the past months as interest rate hikes to tame supercharged inflation fuelled concerns about a slowdown in consumer finance.
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This has led to Australia’s Latitude Group pull back its buyout offer for Humm’s BNPL business, and fellow BNPL firm Openpay to pause its operations on the U.S. market. read more
Zip cited “current macroeconomic and market conditions” as a reason for pulling away from the deal, after saying in June “the acquisition of Sezzle remains on track”.
The Australian BNPL firm added that it continued to expect to deliver group profitability during FY2024.
“We remain dedicated to driving toward profitability and free cash flow and believe this (deal termination) is the best outcome for our shareholders,” said Charlie Youakim, chief executive officer…