PayPal to buy digital money transfer provider Xoom
[SAN FRANCISCO] PayPal Inc said it would buy digital money transfer provider Xoom Corp for about US$890 million in enterprise value as it tries to expand in markets such as Latin America, India and China ahead of a spinoff from eBay Inc.
The offer price of US$25 per share in cash represents a premium of about 21 per cent to Xoom's Wednesday closing price of US$20.70.
Xoom shares were trading around the offer price in extended trading. "Expanding into international money transfer and remittances aligns with our strategic vision to democratize the movement and management of money," PayPal President Dan Schulman said.
Xoom, which has a presence in 37 countries, allows users to transfer money via desktop, mobile phones and tablets.
Xoom will operate as a separate service within PayPal after the completion of the deal.
PayPal allows users to pay for online purchases or electronically transfer money to others.
The San-Jose, California-based PayPal said holders of 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.
PayPal said the deal, expected to close in the fourth quarter of 2015, will slightly hurt its adjusted earnings per share for 2016.
PayPal intends to fund the transaction with cash on its balance sheet.
JP Morgan Securities LLC is financial adviser to PayPal, while Sidle Austin LLP is its legal adviser. Qatalyst Partners is financial adviser to Xoom and Goodwin Procter LLP is its legal adviser.
REUTERS
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