Zip and Sezzle have mutually agreed to terminate their previously announced merger agreement effective immediately.
In a statement to the ASX on Tuesday, Zip said that the deal had been called off in light of current macroeconomic and market conditions.
“We believe that mutually terminating the merger agreement with Sezzle at this time is in the best interests of Zip and its shareholders, and will allow Zip to focus on its strategy and core business in the current environment,” said Zip board chair Diane Smith-Gander.
Sezzle is set to receive US$11 million from Zip to cover “among other things, Sezzle’s legal, accounting, and other costs associated with the transaction” as part of the mutual termination.
The two buy now, pay later companies originally confirmed they were in takeover talks in January before Zip entered into a definitive agreement to acquire Sezzle in an all-scrip transaction by way of a statutory merger in February.
The $491 million deal valued Sezzle at a 22 per cent premium on its stock price at the time.
Following the termination, ZIP stated that it remained firmly focused on its strategic plan and accelerating the path to profitability.
“Zip’s underlying business remains strong with consistent customer and transaction volume growth across core markets, and a solid pipeline of enterprise merchants joining the platform,” it said.
“The US remains a core market and area of focus, and a significant opportunity for the business. Zip is well-capitalised to execute on its strategy and in line with previous guidance, Zip continues to expect to deliver group profitability during FY24.”
Meanwhile, Sezzle said that it was well-positioned with approximately US$71 million of cash on hand and availability on its line of credit facility as of the end of June.
“While we were excited by the potential of this transaction, our board and management team are laser-focused on our strategy and execution,” said Sezzle CEO, co-founder and executive chairman, Charlie Youakim.
“We remain dedicated to driving toward profitability and free cash flow and believe this is the best outcome for our shareholders.”
Sezzle also released preliminary results for the second quarter, with underlying merchant sales expected to sit within the range of US$415 million to US$420 million and total income of between US$28.5 million to US$29.5 million.
