Bill.com to acquire Divvy for $2.5B

Josh Fraser Jun 23rd, 2021 / Acquisition, Estated Episodes, Industry News, Divvy

Bill.com will purchase the Utah-based spend management platform, DivvyPay at a cash and stock deal worth around $2.5 billion. 


The cloud-based technology provider announced this definitive agreement on the May 7. Bill has signed the contract stating that it would fund the deal with a cash price of 625 million dollars and 1.8 billion dollars in common shares. The net takeover price is significantly higher than DivvyPay's post-money price of $1.6 billion achieved during its $165 million financing round earlier this year. In a shareholder report, Bill stated that Divvy would yield a return on its investment by increasing its addressable market in the United States 2x more than usual. Bill believes that extending Divvy's platform globally will help the firm to achieve greater future growth.

The reason behind Bill.com's purchase is that it will enable companies to centralize their finance operations.

Bill.com offers a single point of contact for paying vendors and submitting invoices. With the inclusion of Divvy's technology, Bill states that companies will be able to handle corporate credit cards in a similar spot as well. It emphasized an opportunity to market the Divvy service to its more than 115,000 clientele while promoting its corporate finance network to Divvy's 7,500-plus current small and middle-sized businesses. Bill.com would also consider providing Divvy to businesses outside the United States to boost its extension. As a result of the acquisition, the enterprise expects to unlock additional market opportunities supplementing $100 million (approx) in annual average recurring revenue that Divvy currently generates. Divvy's gross sales steadily increased YoY in the 12 months ending in March, according to Bill.com.

René Lacerte, the Chief executive officer and co-founder of Bill, is delighted and hopeful regarding this merger. He stated that both firms have a similar passion for helping flourish SMBs. And, if they work together will further encourage SMBs to transform rapidly and efficiently.

Conversely, Blake Murray, Divvy's co-founder and CEO, commented that his team is excited to partner with Bill's family. He revealed that Divvy's clients always demand a robust payments platform such that they wouldn't have to handle their finances using various software systems. Fortunately, Bill has that solution. Bill can provide the one-stop-shop portal that Divvy's clients and industry are requesting.

Both Divvy and Bill.com's board members have given their approval to the deal. The transaction is scheduled to happen by the end of Bill.com's first financial year, which ends on September 30, 2021, subject to regulatory permissions and other standard termination criteria. The financial advisor of Bill is Goldman Sachs & Co, and the firm's legal consultant is Fenwick & West LLP. Divvy has retained Financial Technology Partners as its sole operational and financial advisor. Moreover, Morrison & Foerster LLP acted as its defense lawyer.

A brief overview of both the companies:

Headquartered in San Jose, California, Bill also has its office in Houston, Texas. It is a premier supplier of cloud-based technology for small and midsize companies that eases, digitizes, and automates sophisticated back-office financial activities. Bill trades on the New York Stock exchange with a ticker symbol "BILL" with a market cap of $12.319 billion. On the contract day, Bill has also disclosed its third-quarter results for the financial year 2021. Its net revenue was $59.7 million, core revenue was $58.6 million, and gross profit was $44.3 million.

By integrating expense accounting tools and corporate smart cards into a common platform, Divvy modernizes corporate finance. Finance leaders get a genuine insight into their business's spending with Divvy, as well as dynamic controls that keep teams from exceeding the budget. The profitable exit of Divvy is likely to bring a high level of investor interest in the financial technology market.

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