PayPal announced Wednesday it will acquire Xoom Corporation, an international money transfer service that lets U.S. customers send money abroad. PayPal will pay $25 per share in cash, or an approximate $890 million enterprise value – 32% higher than Xoom’s three-month volume-weighted average price.
According to PayPal’s press release, “Xoom is a leading digital money transfer provider that enables consumers to send money, pay bills and send mobile reloads to family and friends around the world in a secure, fast and cost-effective way, using their mobile phone, tablet or computer.”
PayPal President Dan Schulman said Xoom helped customers send approximately $7 billion to others around the world during the 12 months ended March 31, 2015.
Schulman said the deal brings significant expected benefits to both PayPal and Xoom. “For PayPal, acquiring Xoom will allow us to offer more services to our global customer base and help accelerate our expansion in key international geographies, including Mexico, India, the Philippines, China and Brazil. For Xoom, joining PayPal will help increase how quickly it can expand into new markets and accelerate the ways the company can innovate for customers. PayPal will also help Xoom grow by offering Xoom’s services to our 68 million active U.S. customers.”
According to the Wall Street Journal, Xoom experienced a loss of $26.3 million in 2014, “weighed down by a big charge in the fourth quarter tied to a suspected criminal fraud targeting the company’s finance department.” In an earlier article, it said the incident involved employee impersonation and fraudulent requests targeting the company’s finance department, resulting in the transfer of $30.8 million in corporate cash to overseas accounts.
The acquisition is expected to close in the fourth quarter of 2015, at which point Xoom will operate as a separate service within PayPal. The acquisition is subject to the Hart-Scott-Rodino Act; that’s when the DOJ and FTC look at a deal to determine if a merger of two firms could adversely affect competition. The deal is subject to other customary closing conditions as well, including Xoom stockholder approval.
More information is available on the eBay investor relations website.
PayPal also publicly released on Wednesday its historical quarterly financials from Q1-14 through Q1-15 as part of its separation from eBay.