“Xero (XRO) will acquire North American Digital Payments business, Melio, for US$2.5 billion.

“The acquisition is short-term dilutive as XRO is acquiring a loss-making business.

“However, medium term this should help XRO fast track its American expansion.

“The acquisition brings product innovation and makes XROs NAM product more compelling due to combining digital payments and accounting.

“It also brings additional scale that should, with additional sales and marketing investments, move XRO closer to a scale player with critical mass in North America.

“We maintain our Accumulate recommendation and $215 target price,” Raymond said.

Xero (XRO)