BNPL’s Aberrant Latitude Wants To Buy Humm For $ 335 Million
Latitude Financial, an Australian space challenger buy now, pay later, has decided to acquire the consumer business of Humm, one of the less popular players in the space, in a deal worth 150 million shares and $ 35 million in cash.
The deal, which was announced on Thursday, would place Latitude number one among all providers of consumer and consumer loans in Australia and New Zealand.
As part of the deal, Humm’s consumer activities would be combined with Latitude’s pre-existing BNPL offering, while Humm’s shareholders would retain full control of the company’s business activities.
Humm president Christine Christian said the board is currently reviewing the deal.
âHumm’s board of directors and management are committed to maximizing shareholder value,â said Christian. “Against this backdrop, we believe Latitude’s proposal is potentially attractive to Humm shareholders and warrants due diligence and detailed negotiation.”
According to the two parties, each has concluded a non-binding memorandum of understanding to “facilitate reciprocal due diligence” and the negotiation of a formal agreement, which will be bound by exclusivity until the end of January.
Both councils will have the final say on the deal at the end of the month.
The deal comes with a staggered delay, as investor interest in the BNPL space cools on the heels of a massive shake up in Australia’s payments regulations and the launch of a state regulatory investigation of the sector -United.
According to Morgans equity analyst Richard Coles, the dominant players in the sector – particularly Afterpay and Zip – should deliver strong results in the first half of the year to reverse sentiment.
âThe sector is suddenly unloved by investors, so strong 1H22 results are needed to change sentiment,â Morgans said. “We expect strong revenue growth for Afterpay and Zip, but we still expect both stocks to post losses (in the first half of the year).”
Even still, Latitude imagines its chances, as Humm’s efforts to partner in space to avoid consumer abandonment have bordered on survivalism.
Hmmm has been looking to befriend for nearly six months, after the company’s chief executive Rebecca James has shown interest in the idea as early as August, when Block’s takeover of Afterpay was making headlines.
Block’s buyout deal with Afterpay has all but crossed the finish line, after Afterpay shareholders gave the deal the green light in December. If Spain’s central bank gives the green light to the $ 39 billion deal as planned, Afterpay will seize the mantle of Australia’s biggest deal ever.
While investor interest has since cooled, Zip and Afterpay have become investor favorites throughout 2021.
Both companies ended the year among the top five traded companies on the Superhero retail investment platform, with Zip in first position and Afterpay in fifth.
Superhero CEO John Winters told Business Insider Australia the results didn’t come as much of a shock as the curtain has closed on a year when the BNPL space “absolutely took the world over.”
âYou know, it was just an unstoppable freight train of earnings that was obviously sped up by the fact that Square came in and paid $ 39 billion for Afterpay, and I think that gives a lot of credibility to it. ‘space,’ Winters said.
âAnd then seeing people like CBA adopt it as well, I think it’s been really interesting. CBA made a pretty decent investment in Klarna and helped them roll out to Australia and then roll out their own product very quickly. “