PayPal has signed an agreement to acquire San Francisco based Xoom, a leading digital money transfer provider.
This acquisition will allow PayPal to quickly expand into the large and growing global money transfer market. It will also allow paypal to offer more services to global customer base and help accelerate their expansion in key international geographies, including Mexico, India, the Philippines, China and Brazil.
As per media report, PayPal will acquire Xoom for USD 25 per share in cash or an approximate USD 890 million enterprise value.
The transaction represents a premium of 32% over Xoom’s three-month volume-weighted average price and was unanimously approved by the Boards of Directors of both companies, as well as the Board of eBay Inc., PayPal’s parent company.
This acquisition will be closed in the fourth quarter of 2015 subject to customary closing conditions including regulatory approval and Xoom shareholder approval. After the deal closes, Xoom will operate as a separate service within PayPal.
Xoom helps its 1.3 million active customers in the United States send money to and pay bills for family and friends in 37 countries around the world in a secure, fast and cost-effective way, using their mobile phone, tablet or computer.
Xoom helped customers send approximately USD 7 billion to loved ones around the world during the 12 months ended March 31, 2015.
Dan Schulman, President of PayPal, said, “Expanding into international money transfer and remittances aligns with our strategic vision to democratize the movement and management of money. Acquiring Xoom allows PayPal to offer a broader range of services to our global customer base, increase customer engagement and enter an important and growing adjacent marketplace. Xoom’s presence in 37 countries – in particular, Mexico, India, the Philippines, China and Brazil – will help us accelerate our expansion in these important markets.”
John Kunze, President and Chief Executive Officer of Xoom, remarked, “Becoming part of PayPal represents an exciting new chapter for Xoom, which will help accelerate our time-to-market in unserved geographies and expand the ways we can innovate for customers. Being part of a larger, global organization will help us deliver the best possible experience to our customers, while maximizing value for our shareholders.”