Xero Acquires U.S. Fintech Melio for $2.5 Billion in Major U.S. Expansion Push

New Zealand-based accounting software giant Xero has announced a $2.5 billion acquisition of U.S. payments platform Melio, marking the largest outbound deal by a New Zealand company in over a decade. The acquisition significantly strengthens Xero’s presence in the American market, which currently contributes only about 7% of its revenue. Xero is well-established in Australia and New Zealand and sees this deal as a strategic leap to integrate payments directly into its software offering.

Xero’s CEO Sukhinder Singh Cassidy emphasized the transformational potential of the deal, noting it would scale Xero’s reach in North America and help millions of U.S. small- and medium-sized businesses (SMBs) manage accounting and cash flow more effectively from a single platform. Melio, known for its accounts payable and receivable solutions, shares a complementary vision and will add critical functionality to Xero’s core services.

The company forecasted that the acquisition would double its financial sales by 2028, signaling confidence in its ability to integrate and expand Melio’s services. Melio’s co-founder and CEO, Matan Bar, said the partnership was aligned with their goal to expand across the U.S., leveraging Xero’s robust accounting infrastructure to enhance service delivery.

To finance the acquisition, Xero suspended its trading and is raising A$1.85 billion (USD $1.2 billion) from institutional investors. With a market capitalization of A$30 billion, Xero’s move is considered ambitious. The company is betting on the U.S. market as a growth engine, despite the complexities of market competition and integration.

Industry analysts responded cautiously. While some, like RBC Capital Markets, see value in Xero acquiring a fast-growing payments firm, others warn that success will depend on executing synergy and distribution strategies effectively. E&P analyst Paul Mason noted the price tag may be high for Melio as a stand-alone entity, but could be justified if the companies can scale together successfully.

Source: Reuters