PayPal buying money transfer provider Xoom in $890 million deal

When the deal is done, Xoom will operate as an independent service within the PayPal portfolio.

As PayPal prepares for life after eBay, the digital payments platform is bolstering all of its resources from inside and out.

PayPal announced rather quietly on late Wednesday afternoon that it intends to acquire Xoom, a digital money transfer service.

At $25 per share in cash, the deal is worth approximately $890 million. The deal is expected to close by the fourth quarter of 2015.

JP Morgan has been enlisted as financial adviser to PayPal with Sidley Austin LLP acting as the legal adviser for the transaction. Qatalyst Partners is acting as financial adviser for Xoom with Goodwin Procter LLP tapped for legal representation.

If and when the deal is done, Xoom will operate as an independent service within the PayPal portfolio.

PayPal intends to use Xoom's resources to broaden its own range of services and global customer base, based on comments from PayPal president (and soon-to-be CEO) Dan Schulman.

Schulman highlighted Xoom's global footprint in 37 countries, hinting at a foothold in developing markets by specifically calling out "Mexico, India, the Philippines, China and Brazil."

But Xoom's mobile solutions might be of even bigger interest for PayPal considering the company saw more than one billion transactions during the first quarter of 2015 -- one out of three of which derived from a mobile device.

The Xoom-PayPal merger has already been approved by the boards of directors for both companies as well as PayPal's current (and soon to be former) parent, eBay.

Xoom investors already appear to be in agreement as shares spiked by roughly 12 percent in after-hours trading after the news hit.

EBay confirmed plans to spin of its mobile payments subsidiary into a separate publicly traded company last September following months of speculation -- much of which came as a result of some very public criticism from shareholder and prominent financier Carl Icahn.

The separation is expected to wrap up during the second half of 2015.

PayPal has since made a number of public announcements and moves to strengthen its brand in the eyes of both shareholders and consumers.

In May, PayPal said it will trade as a standalone company on the Nasdaq stock exchange under the ticker symbol, "PYPL."

Founded in 1998, the San Jose, Calif.-based company originally traded under the PYPL ticker symbol before it was acquired by eBay for $1.5 billion in 2002.

During a media presentation this spring, PayPal executives promised the tech giant is building up to a full suite of next-generation services for consumers and merchants alike, described to be an "operating system for digital commerce."

"The only thing we focus on is digital and mobile payments. We're not doing this for anything else," Schulman summed up at the time.