Alliance Data to buy BNPL fintech Bread for $450m
Alliance Data, a US-based firm which offers marketing and payments schemes, has agreed to acquire Bread, a buy now, pay later (BNPL) fintech.
The deal, which is valued at $450 million, is still subject to regulatory approvals. But it’s expected to close by the end of this quarter.
The acquirer expects the deal to increase its earnings per share by 2023. Some $100 million of the deal value is made up of Alliance Data common stock.
Upon deal closure, Bread’s team of 185 will transfer over to Alliance Data. This is alongside Bread’s more than 400 corporate clients, which use its BNPL and instalment loan products to grow sales.
Until now, Alliance Data has not hosted a BNPL offering. The firm’s president and CEO, Ralph Andretta, says the deal marks “another way to capitalize on the rapidly growing e-commerce channel”.
Slotting into Alliance Data
Alliance Data’s core offering centres around the use of payment cards. The firm focuses on products which build more loyalty, both for card issuers and for merchants.
It does this by capturing transactional data to help firms better understand consumer behaviour.
It also creates incentives designed to drive sales, engage cardholders, and foster “long-term brand loyalty”. It’s in this second bracket that Bread will sit, under what Alliance Data calls its “Enhanced Digital Suite”.
The firm thinks Bread has “a proven record” in driving client growth. It is therefore certain the deal will help it boost acquisition and checkout rates for its clients.
The acquirer says Bread’s solutions will be available under the Alliance Data brand “soon”.
Tapping a “coveted” demographic
Val Greer, Alliance Data’s chief commercial officer, points out a more specific, target audience-driven reason for the acquisition.
“Digital payment offerings such as buy now, pay later, appeal to our brand partners’ younger, technology savvy shoppers,” says the CCO.
“[They] create more opportunities for retailers to drive sales and build brand loyalty among this coveted demographic.”
BNPL is a burgeoning sector in fintech. The instalment products grew from 3% of all ecommerce payments in 2018, to 8% last year, according to Worldpay research.
Fintechs in the BNPL space have seen their valuations rocket and pockets burst with new funding rounds this year.
Klarna closed its $650 million in an equity funding round in September, at a post money valuation of $10.6 billion.