PayPal has agreed to acquire digital money transfer provider Xoom for approximately $890m, ahead of its planned spinoff from eBay later this month.
The offer price of $25 per share in cash represents a premium of 32% over Xoom’s three-month volume-weighted average price. The transaction is expected to be completed in the fourth quarter of this year.
Xoom allows consumers to send money and pay bills using their mobile phone, tablet or computer.
Xoom will operate as a separate service within PayPal upon completion of the transaction.
The acquisition will strengthen PayPal’s global business, giving it access to Xoom’s 1.3 million active US customers who sent around $7bn for the 12 months ending 31 March. PayPal has about 68 million active users.
PayPal president Dan Schulman said: "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."
Xoom will expand its portfolio of send-markets by using PayPal’s international network.
Xoom president and chief executive officer John Kunze said: "Becoming part of PayPal represents an exciting new chapter for Xoom, which will help accelerate our time-to-market in unserved geographies and expand the ways we can innovate for customers."
