XERO BUYS MELIO TO BOOST US MARKET PRESENCE

Xero, a New Zealand-based accounting software company, has agreed to buy Melio, a US payments platform, for $2.5 billion in a cash-and-stock deal, with up to $500 million more tied to performance and retention goals over three years.

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The acquisition aims to strengthen Xero's foothold in the US, where it earns just 7% of its revenue despite dominating markets in Australia and New Zealand.

Melio's platform, which processes over $30 billion in payments annually for 80,000 small and medium-sized businesses, integrates accounting and payment workflows, offering tools for accounts payable and receivable.

The deal aligns with Xero’s “3x3 strategy,” which focuses on growing its core accounting, payroll, and payments solutions in three key regions: Australia, the UK, and the US.

By combining Melio’s payment capabilities with Xero's cloud-based accounting, the company expects to triple its North American revenue and more than double its group revenue by 2028. Xero's CEO, Sukhinder Singh Cassidy, highlighted the complementary fit, noting that the acquisition addresses a critical need for US small businesses seeking seamless financial tools.

Melio will remain a standalone entity, with its co-founder and CEO, Matan Bar, leading the combined US operations under Singh Cassidy. The deal, one of New Zealand’s largest outbound acquisitions and a major tech exit for Israel-based Melio, is set to close within six months, pending regulatory approvals like US antitrust clearance and shareholder consent.

Xero has secured enough shareholder support to move forward, funding the purchase through a $1.85 billion institutional placement, $360 million in Xero stock, a $400 million credit facility, and $600 million in cash.

WHY MELIO MATTERS