ASX-listed Xero buys integrated payments platform Melio for A$3.8B

Xero has entered into a binding agreement to acquire Melio, a leading US bill payment platform for small and medium-sized businesses, for US$2.5 billion (A$3.8 billion).

Melio integrates accounting and payments, offering end users and their advisors easy-to-use accounts payable workflows and a wide choice of payment methods.

Additional contingent consideration, deferrals and rollovers of up to US$0.5 billion is payable to Melio employees over three years, linked to delivering against pre-agreed performance targets.

Xero CEO Sukhinder Singh Cassidy said adding Melio’s world-class team, technology platform and accounts payable solutions to Xero enabled a step-change in ASX-listed Xero’s North American scale by offering the potential to help millions of US businesses and their accountants to better manage cash flow and accounting on one platform.

“Xero and Melio are highly complementary,” Singh Cassidy said. “Together they complete the key jobs to be done for US SMBs, extend reach across customer segments, provide both direct and syndicated offerings, and deliver multiple revenue drivers.”

Melio co-founder and CEO Matan Bar said joining Xero was an incredible opportunity for the Melio team to further the company’s mission to reinvent the way businesses paid each other.

“Having worked closely with the Xero team, we’re excited by our shared purpose to scale in the US and combine Xero’s accounting capabilities with Melio’s accounts payable and receivable solutions to create comprehensive product offerings for our collective, valued customer base,” Bar said.

The transaction is targeted to be complete within six months subject to conventional conditions, including satisfaction of various regulatory conditions and approvals.