Robbins LLP: Acquisition of Xoom Corporation (XOOM) by PayPal, Inc. May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Xoom Corp (NASDAQ: XOOM) by PayPal, Inc. On July 1, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which PayPal will acquire Xoom. Under the terms of the agreement, Xoom shareholders will receive $25.00 in cash for each share of Xoom common stock.
Is the Proposed Acquisition Best for Xoom and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Xoom is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $25.00 merger consideration represents a premium of only 12.3% based on Xoom’s closing price on June 25, 2015. This premium is significantly below the average one-week premium of nearly 50.1% for comparable transactions within the past five years. Further, the $25.00 merger consideration is significantly below the target price of $32.00 set by an analyst at Buckingham Research Group on March 13, 2015, and $29.00 set by an analyst at SunTrust Robinson Humphrey on April 29, 2015. In the last three years, Xoom traded as high as $36.46, and most recently traded above the target price – at $25.18 – on July 14, 2014.
On April 28, 2015, Xoom reported strong earnings results for its first quarter 2015. Revenue for the quarter was $44.4 million, an increase of 24% from the first quarter of 2014. Gross profit for the quarter was $32.4 million, an increase of 23% from the first quarter of 2014. Additionally, Xoom beat consensus analyst estimates for adjusted EPS and adjusted net income in every quarter for the past year, and beat estimates for sales in three out of the past four quarters. In commenting on these results, Xoom President and Chief Executive Officer John Kunze remarked, “We had a great start to the year, with strength across all key corridors as we exceeded both revenue and EBITDA expectations in the first quarter. Our technology enables us to deliver a high-quality, end-to-end experience with a compelling value proposition for our customer, and this product superiority is setting us apart from the competition. There is significant opportunity for growth in our underpenetrated existing corridors, in recently-entered new markets and in adjacent services such as Bill Pay and Top Up, and we will work tirelessly to ensure that our customers have the very best experience across all markets and products.”
In light of these facts, Robbins LLP is examining Xoom’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Xoom shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Xoom shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.