PayPal to buy digital money transfer provider Xoom Corp for $890 mn
02 Jul 2015
Ahead of its July spin off from its parent eBay, US online e-commerce payment processor PayPal Inc, today struck a deal to buy digital money transfer provider Xoom Corp for $890 million as part of its plan to expand in China, India, Mexico, Philippines and Brazil.
PayPal is offering to pay $25 per share, a premium of about 21 per cent to Xoom's closing price of $20.70 yesterday.
Shareholders holding about 18 per cent of Xoom's outstanding shares, including all executive officers and directors of Xoom and certain entities affiliated with Sequoia Capital, have agreed to vote for the deal.
San Francisco-based Xoom is a digital money transfer provider having 1.3 million active customers in the US and processed $7 billion payments to 37 countries during the 12 months ended 31 March 2015.
Founded in 200, Xoom was initially backed by venture firms including Sequoia Capital, New Enterprise Associates, SVB Capital, and Fidelity Ventures until it went public in 2013 raising $509 million.
PayPal, which processed 1 billion mobile payments for people in 2014, said that the deal will help it to quickly expand into the large and growing global money transfer market, including Mexico, India, the Philippines, China and Brazil.
''I'm excited to announce that PayPal is ready to make another area of payments better for people around the world - international remittances. Today, this primarily cash-based system of sending money abroad can be time-consuming, insecure and expensive,'' said, PayPal's Dan Schulman, president and CEO designee in a company blog post.
This deal benefits both PayPal and Xoom. For Xoom, joining PayPal will help it quickly expand into new markets, while PayPal will strengthen its offering by adding Xoom's services to its 68 million active US customers.