PayPal plans to expand portfolio – The Telegraph

Therefore, it would extend PayPal’s current offering for its existing 68 million active users in the USA. PayPal would end up paying nearly $890 million for the company, exclusive of Xoom’s cash and short term investments along with its debt. Xoom’s stock jumped 21 per cent in nightfall trading to $25.10. Now, Xoom’s customers can likewise pay bills using the service.

The offer price of US$25 per share in cash represents a premium of about 21 per cent to Xoom’s closing price yesterday of US$20.70. During the 12 months ended 31 March, 2015, Xoom’s more than 1.3 million active customers sent approximately $7 billion via the San Francisco-based firm.

“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”. PayPal is set to trade on the Nasdaq under “PYPL” on July 20.

PayPal earlier this year also purchased Paydiant, a startup that helps companies such as Subway and Capital One add loyalty features and mobile payment options into their mobile apps.

Acquiring Xoom will let PayPal broaden its array of services and expand in important markets, particularly China, Brazil, India, Mexico and the Philippines, according to Schulman.

This search for new growth was a factor in Paypal’s separation from eBay, as analysts have said that the ownership of eBay on the company has prevented other big names in the online retail industry from forging deeper partnerships with Paypal.

Xoom will function as a separate service inside PayPal after the completion of the deal. As for the insider transactions for Xoom, John Kunze, CEO of Xoom, sold 18,750 shares of the company at $18.76 per share on May 19.

Xoom is among several upstart companies that are looking to challenge traditional money transfer companies, such as Western Union, in the money remittance business.

PayPal president Dan Schulman told Reuters: “Our aim is to bring the companies together to make it a true consumer champion in remittances”.

Xoom will operate as its separate service under the PayPal umbrella after the deal is completed.

PayPal faces growing competitors from rivals like Stripe and Square, which is widespread with smaller companies, and Apple Inc’s Apple Pay.