Zip Co expands into Europe, Middle East with two BNPL acquisitions

Zip Co expands into Europe, Middle East with two BNPL acquisitions

Buy-now pay-later (BNPL) platform Zip Co (ASX: Z1P) is building on its successful international expansion strategy with the acquisition of two companies that will allow it to push into Europe and the Middle East.

Following the group's breakthroughs in the US and UK markets, Zip Co is now extending its BNPL operations with the acquisitions of European player Twisto Payments and Dubai-based Spotii Holdings.

The acquisitions have a combined enterprise value of approximately $180 million with transaction consideration of $160 million, reflecting Zip's existing equity in both companies.

The news comes a month after the company raised $400 million for its international expansion strategy.

By acquiring Twisto, Z1P hopes to capture a slice of the $1.1 trillion annual e-commerce market in Europe as the target's license can be passported to all 27 member states of the EU.

Zip Co co-founder and CEO Larry Diamond says the acquisition of the Czech-headquartered Twisto is complementary to Zip's offering in the UK, and provides a gateway to one of the largest e-commerce markets globally.

"The acquisition of Twisto shows our commitment to global growth and follows our 'Coalition of Founders' model, where we back strong founders with a shared vision and deep cultural alignment in our quest for global payments coverage," says Diamond.

"We are very much looking forward to adding this strategic geography to our growing footprint and fulfilling global merchant demand.

"We have been impressed by the Twisto team, their deep customer focus and product set and look forward to working closely with them to deliver on the opportunities we jointly have in front of us."

Twisto is already a major BNPL in its own right; with more than 1 million customers and an annual run-rate of $12 million in revenue and $230 million in total transaction volume, the platform is rearing for rapid scaling.

Flagship merchants in the region for Twisto include Pizza Hut, Gap, New Balance and Under Armour.

The acquisition of Twisto will cost Z1P around $140 million, with the transaction to be completed in the fourth quarter of CY21.

In addition, Zip's approach to the fast-growing e-commerce region of the Middle East will be spearheaded from Spotii's headquarters in Dubai.

Founded just last year, Spotii has gained early traction in the BNPL market, and has signed on 650 merchants already including some flagship regional brands.

Under the acquisition, Z1P will purchase the remaining shares in Spotii that it does not already own for around $12 million, implying an enterprise value of $26 million.

"The Spotii acquisition is an important step in Zip's global expansion and international strategy, with e-commerce in the Middle East on a significant upward trajectory," Diamond said.

"We have been working with Spotii since our initial investment in December 2020 to broaden our understanding of the BNPL opportunity in the region and have a number of exciting global merchants we are looking forward to activating in the coming months.

"We also believe there is a large untapped opportunity to bring BNPL to emerging markets where cash on delivery remains a significant merchant challenge, and where the digitisation of retail accelerates."

Shares in Z1P are up 0.92 per cent to $7.10 per share at 10.33am AEST. 

 

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