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PayPal is in the money with new acquisition


San Jose, Calif. – PayPal Inc. is getting itself “in the money” with a major acquisition as the company prepares for its impending July 17 split from eBay Inc.

PayPal will purchase digital money transfer service Xoom Corp. for $25 per share in cash, or about $890 million.

The transaction represents a premium of 32% over Xoom’s three-month volume-weighted average price and was unanimously approved by the boards of directors of both companies, as well as the board of eBay. Xoom allows customers in the U.S. to send money and pay bills around the world using mobile phones, tablets or computers.

By acquiring Xoom, PayPal can cross-sell Xoom services to its 68 million U.S. customers while obtaining a presence in key global markets. Due to anticipated one-time integration costs, PayPal expects the transaction to have a slightly negative impact on its fiscal 2016 earnings per share. PayPal intends to fund the transaction with cash on its balance sheet.

Upon closing of the acquisition, Xoom will operate as a separate service within PayPal. The acquisition is expected to close in fourth quarter 2015, subject to customary closing conditions.

“Expanding into international money transfer and remittances aligns with our strategic vision to democratize the movement and management of money,” said Dan Schulman, president of PayPal. “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.”

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