BANK OF SPAIN facilitates Australia’s largest ever takeover by approving a bid for Afterpay by digital payments company Block.
Whilst it may seem strange that a €25 billion business transaction on the other side of the world should hang on a decision made in Spain, the actual reason is relatively straight forward.
Afterpay was set up in Australia as a ‘buy now pay later’ business which allows in-store and online customers to purchase a product immediately and pay with four equal interest free fortnightly repayments.
All risk passes from the supplier to Afterpay but they charge a commission to the supplier for the service and if customers don’t make the repayments on time, then they receive a penalty charge.
Having seen the model work in Australia, the business quickly expanded to take in the UK and parts of Europe with a new business called Clearpay being set up in Spain following the takeover of Spanish fintech Pagantis in 2020.
Having received a licence to operate from the Spanish authorities, this allowed the company to expand into other parts of the European Union on the back of that licence.
At the same time Block (who were previously known as Square) had snapped up, the Spanish payments application company Verse, so again the Spanish authorities had a further interest in the deal.
In order for the acquisition of the entire operation to go ahead, it was imperative that the Bank of Spain give its approval and this was requested last December with a final positive decision being announced on January 11 meaning that the deal will be completed on February 1.
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