In a bold strategic move, New Zealand-based accounting software company Xero has agreed to acquire U.S. payments platform Melio for $2.5 billion, marking the largest outbound acquisition by a New Zealand company since 2011. The announcement, made on Wednesday, signals Xero’s ambition to strengthen its footprint in the lucrative North American market and bridge a key product gap in its service offering.
Strengthening U.S. Presence and Product Integration
Xero, which trades on the Australian Securities Exchange and dominates accounting software markets in New Zealand and Australia, has long been seeking growth opportunities in the United States. Although it currently earns just 7% of its revenue from the U.S., the company sees massive potential in combining its core accounting tools with Melio’s robust payment infrastructure.
“This deal represents a major leap forward in scaling our North American operations,” said Xero CEO Sukhinder Singh Cassidy in a statement. “By integrating Melio’s payments capabilities, we aim to empower millions of small and medium-sized businesses (SMBs) and their accountants in the U.S. to manage cash flow and finances on a single, unified platform.”
The acquisition not only enables Xero to offer end-to-end financial management but also positions it to compete more aggressively with U.S.-based rivals in the cloud accounting and fintech space.
Projected Growth and Financial Outlook
Xero projects that the acquisition will significantly boost its top line. According to company forecasts, the deal could double its FY2025 revenue by FY2028, representing a transformative shift in scale and service capabilities.
To finance the purchase, the company has temporarily suspended its shares from trading and launched a capital raising effort of A$1.85 billion from institutional investors. Xero, which has a market capitalisation of A$30 billion (approximately $19.5 billion USD), plans to fund the majority of the deal through this equity raise.
Shared Vision and Synergies
Melio’s CEO and co-founder, Matan Bar, expressed enthusiasm for the merger, emphasizing the synergy between the two companies’ missions.
“We’re excited about our shared purpose to grow in the U.S. market,” Bar said. “Combining Xero’s accounting expertise with Melio’s accounts payable and receivable solutions will deliver a powerful financial tool for small businesses.”
The merger gives Xero an immediate advantage in servicing U.S.-based SMEs, a sector increasingly reliant on integrated digital tools to streamline back-office operations.
Market Reactions and Analyst Sentiment
Industry analysts have largely responded with cautious optimism. While many agree that the acquisition makes strategic sense in the long run, they also acknowledge the risks and complexity involved.
“There’s a lot to like about expanding U.S. exposure through a fast-growing, high-quality payments company,” said Garry Sherriff, analyst at RBC Capital Markets, in a client note. “However, it will take time to digest the deal’s structure and evaluate the path forward.”
Similarly, Paul Mason, an analyst at E&P, noted that while the acquisition price seems steep for Melio as a standalone business, the cost becomes justifiable if Xero successfully executes its strategic plan to drive synergies and enhance distribution.
Strategic Importance of the Melio Acquisition
This acquisition fills a long-standing void in Xero’s product suite. Until now, the company lacked a native payment processing engine, forcing users to rely on third-party integrations. Melio’s platform allows users to easily send and receive payments, schedule transactions, and manage invoices—making it a perfect complement to Xero’s accounting tools.
By embedding Melio’s features, Xero can now offer a full-stack financial solution, enabling businesses to manage everything from bookkeeping to cash flow in one seamless environment.
Moreover, with the North American SMB segment projected to spend billions on financial automation over the next few years, this acquisition gives Xero an early-mover advantage in capturing that demand.
A Historic Deal for New Zealand’s Tech Sector
According to LSEG data, this is the largest outbound acquisition by a New Zealand company since 2011, reflecting both the scale and ambition of Xero’s international vision. The deal not only highlights Xero’s transformation into a global fintech powerhouse but also signals growing confidence in New Zealand’s ability to compete in global tech markets.
Investors and market watchers will now be closely monitoring how well Xero integrates Melio’s technology and team, and whether the company can accelerate its U.S. market share without disruption.
What Comes Next?
With this acquisition, Xero enters a critical execution phase. The company must focus on smooth integration, delivering user-friendly product enhancements, and navigating the complexities of expanding in a highly competitive U.S. fintech landscape.
Nonetheless, if successful, this deal could redefine Xero’s global standing and open the door to further innovations in SME financial management.
