Xero Acquires U.S. Payments Firm Melio in $2.5B Deal to Accelerate U.S. Growth

Xero Ltd (ASX:XRO), the New Zealand-based cloud accounting software provider, announced a $2.5 billion acquisition of U.S.-based payments processor Melio Ltd. The binding agreement includes both cash and equity, with an additional $500 million earn-out potential tied to performance milestones and time-based conditions.

The strategic acquisition aims to significantly accelerate Xero’s expansion in the U.S. market, which the company identifies as a key growth region. Xero said the transaction will “significantly boost” its revenue, forecasting that the combined entity’s top line will more than double by 2028 compared to 2025 levels.

Melio’s payment solutions are expected to complement Xero’s existing offerings for small businesses, integrating seamlessly into its cloud-based accounting ecosystem. This move not only broadens Xero’s U.S. footprint but also enhances its product capabilities with Melio’s established expertise in digital payment processing.

To finance the acquisition, Xero plans to raise $1.2 billion through a private placement and secure an additional $400 million via a credit facility. The company believes the acquisition aligns with its long-term vision of becoming a global small business platform and will deliver substantial synergies in the years ahead.

With this acquisition, Xero takes a major step toward scaling its U.S. operations while strengthening its position in the global fintech and accounting software space. Investors are closely watching how this deal impacts Xero’s market share and competitive edge as digital transformation in small business finance accelerates.