Xero (ASX:XRO) share price higher after announcing new acquisition

The Xero Limited (ASX:XRO) share price is on the move on Wednesday after announcing another new acquisition this morning…

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The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition

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The Xero Limited (ASX: XRO) share price is edging higher on Wednesday morning.

At the time of writing, the cloud-based business and accounting platform provider’s shares are up 1% to $122.40.

This latest gain means the Xero share price is now up an impressive 25% over the last six months.

Why is the Xero share price edging higher today?

Investors have been buying Xero shares this morning after it announced its second acquisition of the year.

According to the release, the company has acquired e-invoicing infrastructure business Tickstar for up to SEK 150 million (~A$22.9 million).

This comprises an upfront payment of SEK 60 million (A$9.15 million) and earnout payments of up to SEK 90 million (A$13.7 million). The latter will be based on product development and performance milestones. Both will be settled 50% in cash and 50% in Xero shares.

Completion of the transaction is expected in the first quarter of FY 2022 (before 30 June 2021) and remains subject to satisfaction of closing conditions.

The transaction, integration, and operating costs are anticipated to have minimal impact on Xero’s FY 2022 operating earnings.

What is Tickstar?

Tickstar is a Sweden-based e-invoicing infrastructure business that allows organisations such as Xero and its customers to connect to a global e-invoicing network. This enables faster and more secure transactions.

Management notes that the acquisition aligns with Xero’s strategic priority to drive the adoption of cloud accounting around the world.

Xero’s Chief Product Officer, Anna Curzon, commented: “The acquisition of Tickstar is an important step in our strategy to help small businesses digitise more of their workflows and get paid faster using cloud-based technologies. As more governments around the world adopt e-invoicing, Tickstar’s technology will help our customers comply with existing and future legislation and realise the many benefits that e-invoicing brings.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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