Australian buy-now-pay-later group Afterpay will merge with US digital payments giant Square in a deal worth $39 billion.
The pair have entered into a scheme implementation deed under which Square will acquire all of the issued shares in Afterpay.
The transaction - which has been unanimously recommended by the Afterpay board barring no other superior offer emerging - is valued at $39 billion ($US29 billion) and will be paid in Square stock.
"Square and Afterpay have a shared purpose," Square CEO and co-founder Jack Dorsey, who also founded Twitter, said in a statement on Monday.
"Together we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands."
Square said Afterpay would be integrated into its existing Seller and Cash App units, allowing merchants to offer BNPL options to customers at checkout.
Afterpay customers will be able to manage their instalment payments directly in Square's Cash App and Cash App customers will be able to look up merchants and BNPL options within the app.
Under the deal, Afterpay shareholders will get 0.375 Square shares for each Afterpay share held.
Based on Square's US closing price of $US247.26 per share on July 30, Afterpay shares have an implied value of $126.21 each - a premium of about 30 per cent to Friday's close.
The deal is expected to be completed in the first quarter of calendar 2022, pending court approval of a scheme of arrangement.
Afterpay's co-founders and co-CEOs - Anthony Eisen and Mick Molnar - will join Square once that's done.
Afterpay also outlined full-year sales figures, which showed a 90 per cent increase in sales to $21.1 billion.
The biggest improvement came in the UK and Europe (227 per cent) where the company trades as Clearpay.
The company also claimed the number of customers around the world using its service improved by 63 per cent to 16.2 million.
The number of businesses improved by 77 per cent to 98,200.
Afterpay shares were up 23.73 per cent to $119.60 at 1137 AEST.
