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Zip share price: where next following EU and UAE acquisitions?

We examine the details behind the company’s latest acquisition(s) announcement.

Two for one

Popular buy now pay later company Zip (ticker: Z1P) on Monday announced two strategic acquisitions, one in Europe (EU) and the other in the Middle East (UAE).

In recent times, Zip has proven to be a highly acquisitive company with wide-reaching global ambitions, last year acquiring the US-based BNPL Quadpay. Since then Quadpay has grown from strength to strength, consistently reporting double and triple-digit growth across a number of key metrics.

For instance, in the third quarter Zip reported that Quadpay transaction volumes rose 234% to $762.0 million, while revenues increased 188% to $54.4 million.

As the company pointed out:

‘Zip is building its playbook in successfully identifying, completing and integrating strategic acquisitions.'

I guess if you can’t build it, buy it.

Framed against these broader ambitions, the push into Europe through the Twisto acquisition and the push into the Middle East via the Spotii acquisition should come as little surprise to investors and the market more broadly.

To note, Zip already had significant shareholdings in both of these companies prior to yesterday’s announcement, rather the release highlights the company’s intention to acquire the remaining shares in these companies.

Management said they used this approach – acquiring a small initial stake to validate overall alignment between the businesses.

Twisto

Management said expanding into Europe made sense given the size of the region’s e-commerce market, with annual e-commerce volumes estimated at $1.1 trillion.

On a more granular level, as part of the latest market release Zip highlighted a number of Twisto’s impressive operational statistics, including:

  • Annual run-rate revenues of $12 million against total transaction volumes of $230 million.
  • Total merchants of 14,000, which include a number of high profile brands such as Pizza Hut, Gap and New Balance, among others.

Commenting on the acquisition, Twisto's CEO, Michal Smida, said:

'We're excited to join the global Zip team to take advantage of the significant European opportunity and to continue to develop innovative BNPL solutions.'

The company said it would purchase the remaining Twisto shares for $140 million, with the acquisition expected to be finalised within the fourth quarter of this calendar year.

Spotii

Like the Twisto play, management said Spotii will help Zip gain exposure to the Middle Eastern market, which the company says is one of the fastest growing e-commerce regions globally.

Commenting on the acquisition, Spotii's co-founder, Anuscha Ahmed said:

'Joining forces with Zip – a global leader in the BNPL space – will enable us to drive further growth by tapping into the company's advanced technology and expertise.'

Zip said it would purchase the remaining shares in Spotii for $21 million, implying a total enterprise value of $26 million. The acquisition is expected to be finalised by the third quarter of this calendar year.

Zip share price

While the Zip share price has traded up since Monday’s open, there was nothing close to ‘frantic’ buying action in response to the announced acquisitions.

Year-to-date Zip is up 29%.

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