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Highlights:
- Xero to acquire US payments platform Melio for $3.9 billion
- Strategic push to scale North America operations
- Acquisition aligns with Xero’s '3x3' growth roadmap
Xero (ASX:XRO), a leading ASX200 stock, has announced a landmark $3.9 billion acquisition of US-based payments processor Melio, advancing its strategic ambitions in the competitive North American small and medium-sized business (SMB) space. This move reflects Xero’s commitment to expanding its core offerings across its key markets: Australia, the United Kingdom, and the United States.
Melio’s platform is designed for SMBs and their advisors, combining intuitive accounts payable features with a wide array of payment options. With its streamlined workflows and seamless integration of accounting and payments, Melio is a natural fit for Xero’s ecosystem.
The deal is viewed as a vital component of Xero’s ‘3×3’ strategy—focusing on enhancing core accounting, payroll, and payments capabilities within priority international markets. The acquisition is expected to support Xero’s global expansion while bolstering its revenue-generation potential.
Xero’s leadership noted that Melio’s technological edge and innovation in accounts payable solutions will help scale Xero’s presence in the US significantly. The integration of both platforms aims to empower millions of SMBs and their advisors with better tools to manage cash flow and streamline operations from a single interface.
“Xero and Melio complement each other strategically and operationally, enabling deeper customer engagement across segments and opening doors to more diversified revenue opportunities,” said Sukhinder Singh Cassidy, Xero’s CEO.
Deal Structure and Funding Details
To finance the acquisition, Xero will utilize a multi-pronged funding plan:
- $1.85 billion institutional placement at $176/share (a 9.4% discount to the prior close)
- $554 million in Xero scrip to existing Melio shareholders
- $615 million unsecured revolving credit facility
- $923 million from existing cash reserves
A further $770 million may be paid out if Melio meets certain performance benchmarks post-acquisition.
Melio, valued at approximately 13.4 times its annualized revenue of $288 million (as of March), has recorded an impressive 127% compound annual growth rate over the past four years. This high-growth profile aligns well with Xero’s aspirations and positions it competitively within the ASX200 landscape.
For investors tracking ASX200 stocks, Xero’s acquisition of Melio could signal a strategic shift toward deeper global integration and digital transformation in financial services.
As this deal unfolds, it reflects how key ASX-listed companies are leveraging acquisitions to strengthen global market positions and build long-term value through technology-led innovation.
