XRO - Xero Limited

Xero chief executive Sukhinder Singh Cassidy is hailing the strong support from existing and new institutional investors after it successfully raised $1.85bn to fund its purchase of US payments business Melio.

Xero is funding the $4bn plus ‘step-change’ deal, announced on Wednesday, through the institutional placement, $US360m of Xero shares issued to Melio shareholders, a fully underwritten $US400m credit facility, and $US600m of cash.

“Melio presents an incredibly exciting opportunity for Xero…” Ms Singh Cassidy said of her first big purchase since taking charge of Xero in 2023.

Approximately 10.5 million new fully paid ordinary shares in Xero at the price of $176 per share will be issued under the placement. Settlement is expected on June 30, with allotment and normal trading expected to occur on July 1.

Xero will also offer eligible shareholders the opportunity to participate in a non-underwritten share purchase plan, where it is targeting $200m. Details of that will be revealed around July 2.

Xero will resume trading on Thursday, after entering a halt at $194.21 for the raise, and is likely to come under pressure.

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Ferret said:

SPP opened today.

XRO is now trading under $178, so I'm not rushing to participate at the lower of $176 or a 2% discount to market.

Let's see how things look closer to the 21st July closing date.

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