New Zealand-based Xero forks out over US$2.5 billion to buy US fintech firm Melio

[BENGALURU] Xero, New Zealand’s information technology giant, said on Wednesday (Jun 25) it would buy US-headquartered fintech firm Melio for an upfront consideration of US$2.5 billion, aiming to more than double its group revenue by 2028.

The cash-and-stock deal would also see Melio receiving up to US$500 million as part of deferrals and rollovers, laid out over the next three years.

The payment is largely tied to Melio meeting specific performance targets, with the rest dependent on time-based milestones and annual goals.

The acquisition will “significantly boost” Xero’s top line, as the firm expects the combined business to more than double its group revenue in 2028, compared with fiscal 2025.

The acquisition will also accelerate Wellington-headquartered Xero’s US revenue growth and integrate accounting and payment solutions on a single platform, enhancing services for its 4.4 million subscribers.

Melio, which has offices in New York and Tel Aviv, provides digital bill payment solution for small businesses.

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The deal will be funded through a placement to raise US$1.2 billion, a US$400 million unsecured credit facility, among others.

“Xero and Melio are highly complementary ... together they complete the key jobs to be done ... provide both direct and syndicated offerings, and deliver multiple revenue drivers,” Xero CEO Sukhinder Singh Cassidy said. REUTERS