ASX 200 darling Afterpay Ltd (ASX: APT) has had quite the year in 2021 so far, capped off of course by the company's pending acquisition by the US payments giant, Square Inc (NYSE: SQ).
Afterpay and Square announced this blockbuster marriage, which will be the largest acquisition in Australia's corporate history, back in early August. So, examining Afterpay's share price performance over the first quarter of FY2022 (1 July – 30 September) might be especially illuminating.
Let's dig in.
How did the Afterpay share price perform over the FY22 first quarter?
Afterpay shares started the 2022 financial year on 1 July at a share price of $118.17. On 30 September, the buy now, pay later (BNPL) giant ended the quarter at a share price of $121.32. That puts its raw gains for the quarter at 2.67%.
Afterpay doesn't pay a dividend, so that's the absolute return shareholders are left with.
Here's something else to consider, though. Square and Afterpay announced their merger plans on the morning of Monday 2 August. Up until that point, Afterpay had lost a stunning 18.2% since the start of the quarter, closing on Friday 30 July at a price of $96.66.
The deal Square put forward to acquire Afterpay values the Afterpay share price at 0.375 of one Square share. That's because Square's offer was all-scrip, putting up 0.375 Square shares for every Afterpay share held.
That intrinsically ties the Afterpay share price to the Square share price. As it stands today, Square last traded at a price of US$249.43. That works out to be $340.94 in Aussie dollars at the current exchange rate.
That places Square's offer at a value of $127.85 for every Afterpay share as of today.
Looking at Afterpay's share price history, the Square acquisition offer is probably largely to thank for Afterpay's positive first quarter.
At the time of writing, the Afterpay share price is $123.43, up 2.32% so far on Friday.
Afterpay has a market capitalisation of $34.93 billion.
