Xoom Corporation (XOOM) to be Acquired by PayPal
Shares of Xoom Corporation (XOOM) were trading up +4.38 or +21.16 percent to $25.08 per share in Thursday's premarket, after PayPal (PYPL) announced late yesterday they would be buying the company. Xoom Corp. stock closed at $20.70, down -0.35 or -1.69 percent in Wednesday's regular trading session.
San Francisco, California based Xoom Corporation is an online money transfer and remittance service allowing clients to send money, reload cell phones and pay bills from the United States to 33 countries.
San Jose, California based PayPal Inc. is one of the world's largest online payment companies. The company specializes in online money transfers and services online vendors, commercial and retail users, as well as auction sites and private individuals. The company moved roughly $230 billion in 26 currencies from 190 countries last year and had revenue of $7.9 billion. PayPal went public in 2002 and later that year became a wholly owned subsidiary of eBay (EBAY). PayPal was responsible for 44 percent of eBay's profit last year and is expected to separate from eBay on July 17th.
The companies announced yesterday after the market close that they had entered into a definitive agreement, which would have PayPal acquire Xoom Corp. for $25 per share or roughly $890 million. The deal represents a 32 percent premium over the average price of Xoom stock over the last three months and was unanimously approved by the board of directors of both companies, as well as the board of PayPal's parent company, eBay.
President and Chief Executive Officer of Xoom John Kunze said in a press release that, "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. Being part of a larger, global organization will help us deliver the best possible experience to our customers, while maximizing value for our shareholders.
Dan Schulman, President of PayPal, stated, "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.
The transaction is expected to close by the fourth quarter of 2015 subject to the customary closing conditions such as shareholder and regulatory approvals. Once the transaction is complete, Xoom will operate as a separate service within PayPal.
Xoom stock has been volatile since its IPO, having traded as high as $34 per share in 2013, the year it went public. Shares hit a low of $13.14 per share in December of last year, nevertheless, with today's premarket action, Xoom stock is trading a fraction above PayPal's target price of $25 per share.
Other News About Xoom
Xoom May Finally Be Fully Valued, Susquehanna Warns; Firm Downgrades Stock
Analyst lowers price target for Xoom from $31 per share to $24 per share.
Xoom's Business Strategies Impress, High Cost Raise Caution - Analyst Blog
Analysts at Zacks are concerned with the company's "burgeoning expenses and significant operating losses.
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