Israeli fintech startup Melio was acquired for $3 billion by New Zealand’s accounting software giant Xero, both companies announced on Wednesday.
The sum of $2.5 billion will be immediately paid in cash and shares, with an additional $500 million in milestone payments and the continued employment of current staff members, according to Israeli financial outlet Globes.
The Australia-listed, New Zealand-headquartered firm has been working to scale its sales in North America, which currently account for about 7%, Reuters reported.
The deal with Melio “enables a step change in our North America scale and the potential to help millions of U.S. small-to-medium businesses and their accountants better manage their cash flow and accounting on one platform,” said Xero CEO Sukhinder Singh Cassidy in a statement, as cited by Reuters.
Xero projects that the acquisition will double its 2025 financial sales by 2028, according to the report.
Melio, a Tel Aviv-based payments provider for small and medium businesses listed in New York, was founded in 2018 by Matan Bar, Ziv Paz and Ilan Atias.
Bar said he was “excited by our shared purpose to scale in the U.S. and combine Xero’s accounting capabilities with Melio’s accounts payable and receivable solutions,” according to Reuters.
Before the acquisition, Melio raised $600 million in capital. At the peak of the Covid tech boom, the Israeli company was valued at $4 billion, Globes reported.
The three founders hold a combined 7-9% of the company’s shares and are expected to earn about $100 million each from the exit, the report added.
This acquisition marks the biggest outbound acquisition by a New Zealand firm since 2011, according to LSEG data, as reported by Reuters.
In March, Google parent company Alphabet confirmed its $32 billion acquisition of Israeli cloud security firm Wiz, making it the tech giant’s largest deal to date.
