ASX-listed Xero to acquire US fintech Melio for US$2.5 billion

ASX-listed Xero Limited have announced it has entered into a binding agreement to acquire 100% of Melio Limited and its associated entities (collectively Melio).

Melio is a leading US SMB bill pay platform that seamlessly integrates Accounting and Payments, offering US SMBs and their advisors easy-to-use accounts payable (A/P) workflows and a wide choice of payment methods. Acquiring Melio delivers a step change in Xeroʼs US value proposition and scale, accelerating its 3×3 strategy and global high growth aspirations.

This acquisition solves a critical customer need, uniting Accounting and Payments in one platform for customers. Itʼs a powerful strategic fit, aligning with Xeroʼs 3×3 strategy and it brings Melio’s world-class team and platform to Xero. This will drive compelling value creation for the US business and the group globally.

The upfront consideration will be US$2.5 billion (A$3.9 billion) in cash and Xero scrip. Additional contingent consideration, deferrals and rollovers is payable to Melio employees of up to US$0.5 billion payable over three years. The majority is linked to delivering against certain pre-agreed outperformance targets, and the remainder subject to the passage of time, annual business objectives and continued employment.

Xero CEO Sukhinder Singh Cassidy said, “Weʼre thrilled to announce weʼre acquiring Melio, a leading, high-growth US B2B payments platform that strongly aligns with our 3×3 strategy and US growth ambitions.

“Adding Melio’s world-class team, technology platform, and innovative A/P solutions to Xero enables a step change in our North America scale and the potential to help millions of US SMBs and their accountants better manage their cash flow and accounting on one platform. Xero and Melio are highly complementary — together they complete the key jobs to be done for US SMBs, extend reach across customer segments, provide both direct and syndicated offerings, and deliver multiple revenue drivers.”

Melio Co-Founder and CEO Matan Bar said, “Joining Xero is an incredible opportunity for the Melio team to further our mission to reinvent the way businesses pay each other. Having worked closely with the Xero team, weʼre excited by our shared purpose to scale in the US and combine Xeroʼs accounting capabilities with Melioʼs accounts payable and receivable solutions to create comprehensive product offerings for our collective, valued customer base.”