Zip had previously announced a merger agreement for the proposed acquisition of Sezzle.
Zip has stated that it remains firmly focused on its strategic plan and accelerating its path to profitability.
As part of the mutual termination, Sezzle will receive from Zip US USD 11 million, to cover, among other things, Sezzle’s legal, accounting, and other costs associated with the transaction.
Why did they terminate the agreement?
The timing of the move underscores the sudden cooling in investor sentiment towards speculative technology firms as the Ukraine war and supply chain problems push up inflation and interest rates, eroding consumer purchasing power.
As the termination has the potential to slow Zip’s near-term cash burn, as mentioned by Reuters, it also slowed the scaling of Zip’s US business, in which transaction frequency concerns persist.
A popular sector with Australian stock investors during COVID-19 due to exposure to the shift to living and working online, BNPL and other fintech firms have in recent months faced imploding takeovers, layoffs, and even collapse.