Xero to buy US payments platform Melio for $3.9b, raises capital to fund deal
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The news: Accounting software group Xero has agreed to acquire US payments software company Melio for an upfront cost of $3.9 billion.
The numbers: New Zealand-based Xero said the acquisition will be funded through a combination of a $1.85 billion institutional placement, USD360 million ($555 million) of Xero scrip issued to existing Melio shareholders, a USD400 million revolving credit facility, and USD600 million of existing cash.
The institutional placement will be conducted at a fixed offer price of $176 per new share, representing a 9.4% discount to Xero's last closing price of $194.21 on Tuesday.
The context: Xero said the combined business is expected to significantly accelerate its US revenue growth and provides the opportunity to more than double Xero's FY25 group revenue in FY28, excluding anticipated revenue synergies.
Melio, which has offices in New York, Tel Aviv and Denver, provides accounting and payments software to small and medium-sized businesses.
Xero hopes to complete the deal within six months. Melio's co-founder and CEO Matan Bar will be responsible for the combined US business, reporting to Xero CEO Sukhinder Singh Cassidy.
What they said: "We're thrilled to announce we're acquiring Melio, a leading high-growth US B2B payments platform that strongly aligns with our 3x3 strategy and US growth ambitions," said Singh Cassidy.
Bar said: "Having worked closely with the Xero team, we're excited by our shared purpose to scale in the US and combine Xero's accounting capabilities with Melio's accounts payable and receivable solutions to create comprehensive product offerings for our collective, valued customer base."
