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Key points
- Zip has confirmed that it is in talks to acquire Sezzle
- Talks are at a preliminary stage
- No financial details have been provided to the market
The Zip Co Ltd (ASX: Z1P) share price is rising on Tuesday morning.
At the time of writing, the buy now pay later (BNPL) provider's shares are up 1% to $3.32.
Why is the Zip share price rising?
Investors have been bidding the Zip share price higher this morning after it confirmed speculation that it is interested in acquiring rival Sezzle Inc (ASX: SZL).
However, no details have been provided in respect to the potential price that Zip would pay to acquire its BNPL rival.
The Zip Board commented: "Zip confirms it is in discussions with Sezzle in relation to a potential acquisition. Zip is always interested in pursuing options that are in the best interests of shareholders; however the discussions with Sezzle are preliminary in nature and there is no certainty that the discussions will result in a transaction of any kind."
Unsurprisingly, the Sezzle share price is charging higher on the news. Its shares are currently up 19% to $2.55 in early trade.
Why would Zip acquire Sezzle?
The Zip Board revealed that it is always on the lookout for transactions that will deliver value to shareholders.
It explained: "The Zip Board remains committed to ensuring any transaction delivers value to shareholders and will always be disciplined in its assessment of potential opportunities. It will only pursue transformational transactions that help accelerate the delivery of Zip's broader strategic objectives such as enhanced scale in core markets, improved customer and merchant propositions and a faster path to profitability through significant synergy opportunities."
Based on its discussions, it appears to see Sezzle as a potential transaction that could achieve these requirements. Time will tell if these talks turn into something more concrete.
