PayPal Agrees to Buy Xoom for $890 Million

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Xoom. a San Francisco-based online money transfer technology and services company that went public in 2013, is being acquired by PayPal for $25 per share in cash or $890 million.

The price represents a  32 percent premium over Xoom’s three-month volume-weighted average price.

As stated in a PayPal-issued release about the tie-up, “Acquiring Xoom allows PayPal to offer a broader range of services to our global customer base, increase customer engagement and enter an important and growing adjacent marketplace. Xoom’s presence in 37 countries – in particular, Mexico, India, the Philippines, China and Brazil – will help us accelerate our expansion in these important markets.”

Put in plain English: Xoom’s core business centers on money transfers for friends and family remittances. PayPal’s transactions mostly center on commercial payments. Now PayPal, which claims 68 million active U.S. customers, will have better reach into the former.

Before going public, now 14-year-old

Xoom raised $78 million in outside funding from a long list of investors, including Glynn Capital Management, Sequoia Capital, New Enterprise Associates, and Fidelity Ventures. Its founding CEO was Kevin Hartz, who went on to co-found the online ticketing company Eventbrite, where he remains CEO.

As a public company, Xoom appeared to be ticking along at a steady clip, though it hit a bump in the road earlier this year when it announced $30.8 million in fourth-quarter costs related to the suspected impersonation of an employee, along with fraudulent requests that were made to its finance department. At the time, its CFO resigned,  though Xoom said his exit wasn’t the result of a disagreement with the company.

Either way, Xoom’s stock, which peaked at around $34 per share in July 2013, didn’t seem to be too negatively impacted by the event. In January, it was trading at roughly $17. As of yesterday, its shares were up five dollars to $22 per share.

Here’s the full release  about its sale to PayPal if you’re looking to learn more.

Source: techcrunch.com

Category: Bank

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