The online payments company PayPal is acquiring San Francisco-based digital money transfer provider Xoom, for $25 per share in cash at an approximate $890 million enterprise value. The development comes less than three weeks before PayPal’s planned split with eBay, which is expected to happen on July 17.
Xoom helps its 1.3 million active customers in the United States send money to and pay bills for family and friends in 37 countries around the world in a cost-effective way, using their mobile phone, tablet or computer. It helped customers send approximately $7 billion to loved ones around the world during the 12 months ended March 31, 2015.
The transaction is expected to close in the fourth quarter of 2015, and after the deal closes, Xoom will operate as a separate service within PayPal.
For PayPal, acquiring Xoom will allow it to offer more services to its global customer base and will help in accelerating its expansion in key international geographies, including Mexico, India, the Philippines, China and Brazil. For Xoom, joining PayPal will help it to 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 68 million active U.S. customers.
Founded in 2001 by PayPal investor Kevin Hartz and serial entrepreneur Alan Braverman, Xoom went public in 2013 and is backed by Sequoia Capital, New Enterprise Associates, SVB Capital and Fidelity Ventures.