Shares in US BNPL player Sezzle tumbled by 30% as Australian rival Zip pulled out of a proposed $491 million merger deal.
In an ASX announcement, Zip says the deal was dumped by mutual agreement "in light of current macroeconomic and market condictions".
Sezzle, which announced plans to cut 20% of its workforce in March, will receive an $11 million termination from Zip to legal, accounting and other costs associated with the transaction.
The combination of Zip and Sezzle wass expected to result in pro forma 8.8 million customers and pro forma 60.5k merchants in the US.
Zip at the time said it was targeting cost savings of A$60-80 million from the transaction from operating expenses and net margin opportunities.
In a statement, Zip chair, Diane Smith-Gander, says: “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.”
The notification comes just a day after Zip revealed that it was closing Pocketbook, the money management app it bought for A$7.5 million in 2016, as part of an effort to get its house in order under challenging market conditions.
SeZzle's share price plunged 27 cents, 34.94% lower than its previous close, on the news.
The loss-making fintech is facing a bleak future, as rising interest rates take the shine off the once razzle-dazzle buy now, pay later market. As investors shun the market, Sezzle ended the latest quarter with approximately US$71 million of cash and availability on its line of credit facility.