PayPal has acquired digital money transfer company, Xoom in a deal that will see each Xoom shareholder collecting $25 per share – totaling $1.09 billion. This is in addition Xoom’s cash and short-term investments and including its debt, PayPal would end up paying about $890 million for the company.
PayPal said the acquisition would allow it to broaden its range of services for it global users. Xoom currently allows users in USA to send money to – and pay bills for people around the world using their mobile phones, tablets, and computers.
“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,” PayPal president Dan Schulman said in a press release. “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.”
It is expected that PayPal’s know-how and relationship with banks and regulators in various countries would allow Xoom to expand its digital transfer service, Xoom’s chief executive John Kunze told the Times.
“You can imagine us getting a global footprint much faster and with much less execution risk,” Kunze said.
Due to anticipated one-time integration costs, the completion of the transaction is expected to be slightly dilutive to PayPal’s non-GAAP earnings per share for FY 2016, the company said. PayPal intends to fund the transaction with cash on its balance sheet. Upon closing of the acquisition, expected in the fourth quarter, Xoom would operate as a separate service within PayPal.
