PayPal said it has agreed to acquire Xoom, a digital money transfer provider, for USD 25 per share in cash, bringing the total entreprise value to USD 890 million. The deal, at a 32 percent premium over Xoom's three-month volume-weighted average share price, was unanimously approved by the boards of directors of both companies, as well as the board of PayPal parent eBay.
The acquisition will allow PayPal to offer a broader range of services worldwide, increase customer engagement and enter a growing adjacent marketplace, the company said. Xoom is present in 37 countries, and in particular in Mexico, India, the Philippines, China and Brazil.
Due to anticipated one-time integration costs, the transaction is expected to be slightly dilutive to PayPal's non-GAAP earnings per share for 2016. PayPal intends to fund the deal with cash on its balance sheet.
Upon closing, expected in the fourth quarter, Xoom will operate as a separate service within PayPal. The acquisition is subject to customary closing conditions, including Xoom stockholder approval, the expiration and the receipt of certain consents relating to Xoom's money transmitter licenses.
Holders of about 18 percent of Xoom's outstanding shares, including all executive officers and directors of Xoom and certain entities affiliated with Sequoia Capital, have given their support to the sale.
