3 Feb 2012

Xero acquires Auckland software company

10:43 am on 3 February 2012

Xero says its purchase of an Auckland software development company will help it defend its position in the online accountancy market.

The company bought the 84% of Max Solutions it did not already own for $2 million in cash and four million in Xero shares.

Max Solutions has an online job, time and invoice management system used by more than 1000 businesses in 35 countries.

Xero chief executive Rod Drury says adding the software to the portfolio will help the company to win business from entire accounting practices.

Mr Drury says the purchase of Max Solutions will also help with Xero's plans to create a development hub in Auckland. He believes between 500 and a 1000 jobs could be created as the business grows to eventually having 1 million customers.

Meanwhile, Xero raised $20 million to fund growth overseas by selling new shares to key investors.

New shares have been sold at $2.75 each to independent chairman Sam Knowles, independent director Sam Morgan, the former co-founder of MYOB Craig Winkler, and the investment vehicle of Peter Thiel, who co-founded Paypal and was one of the first investors in Facebook.

Small shareholders will also get their chance to buy up to $15,000 of extra shares at the same price.

Shares in Xero rose 8 cents to $3.02 on Thursday.