WELLINGTON: Accounting software company Xero Ltd. said Wednesday it will acquire U.S.-based payments platform Melio for $2.5 billion in cash and stock, in a move aimed at significantly accelerating its North American growth strategy.
The acquisition, announced alongside a fully underwritten A$1.85 billion (US$1.2 billion) capital raise, aligns with Xero’s “3×3” strategy targeting growth in three core services—Accounting, Payroll, and Payments—across key markets including the U.S., U.K., and Australia.
Founded in 2018, Melio provides small and mid-sized U.S. businesses with digital accounts payable workflows and a range of payment options. Melio processed over $30 billion in payments in fiscal 2025 and reported $153 million in revenue.
“Adding Melio’s world-class team, technology, and A/P platform to Xero enables a step change in our U.S. scale,” said Xero CEO Sukhinder Singh Cassidy. She added the deal would allow U.S. small businesses and accountants to better manage accounting and payments on a single platform.
The transaction will be funded through equity issuance, debt facilities, and Xero’s existing cash. An additional $500 million in contingent compensation is earmarked for Melio employees, subject to performance milestones and continued employment.
Xero expects the acquisition to triple its North America revenue and ARPU on day one and estimates revenue synergies of $70 million by fiscal 2028. Melio’s CEO and co-founder Matan Bar will lead the combined U.S. business unit following the deal’s close, targeted within six months, pending regulatory approvals.
Xero shares will also be offered to eligible investors via a share purchase plan targeting an additional A$200 million.