Xero shares tank on $3.9b Melio acquisition
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More news: Xero shares plunged in early trading after emerging from a trading halt, following the announcement of its $3.9 billion outlay on US payment platform Melio on Wednesday.
Xero shares were down 7.9% to $178.83 at 10:45am AEST, making it the worst performing stock across the ASX 200 index.
Xero completes $1.85b institutional placement to fund Melio acquisition
The news: Accounting software group Xero has completed the $1.85 billion institutional placement that will help fund its near $4 billion cash and scrip takeover of US-based software firm Melio and announced a share purchase plan.
The numbers: Xero has completed the fully underwritten institutional placement announced on Wednesday. The new shares will be settled on 30 June with allotment and trading to occur on 1 July.
Xero issued around 10.5 million new fully paid ordinary shares to sophisticated and institutional investors at a price of $176 per share.
The context: Eligible shareholders - those who were registered shareholders on the record date of 24 June - will also be able to apply for up to $30,000 in new shares through a non-underwritten share purchase plan (SPP).
Xero aims to raise about $200 million through the SPP but this may be raised if there is excess demand.
The new shares issued through the SPP will be the lower between the placement price or a 2% discount to the five-day volume weighted average price of Xero shares up to and including the SPP closing date of 2 July.
What they said: “We’re very pleased with the strong support we’ve received from both existing and new institutional investors for this placement,” Xero chief executive Sukhinder Singh Cassidy said.
“We can’t wait to welcome Melio’s world-class team to Xero, once the transaction completes, and work together to deliver on our shared goals.
“Melio presents an incredibly exciting opportunity for Xero and we look forward to creating a market-leading Accounting and Payments offering that maximises value for our customers and supports our 3x3 strategy and US ambitions.”
The source: ASX
