Online accounting platform Xero is buying Danish workforce management platform Planday, which claims more than 350,000 employee users across Europe and the UK.
Xero, which posted its first net profit last May, will pay €155.7 million (NZ$259 million) up front and a subsequent earnout payment of up to €27.8 million (NZ$46.3 million) based on product development and revenue milestones.
The total potential consideration is therefore €183.5 million (NZ$305.3 million).
Approximately 45 per cent of the up-front consideration will be payable in Xero shares and 55 per cent in cash. Up to half of the earnout payment will be also be settled in Xero shares with the remainder paid in cash.
Planday simplifies employee scheduling, allowing businesses to forecast and manage their labour costs.
Founded in 2004 and is headquartered in Copenhagen, Planday's primary geographic markets are Denmark, Norway, Sweden, the UK, Germany and France.
Following the acquisition, it would expand into other markets where Xero operates, supporting Xero’s long-term growth.
Planday has been a Xero ecosystem partner since 2019 and will continue to offer services to existing customers and partners, including other accounting software providers.
Xero CEO Steve Vamos said the buyout aligned with Xero's purpose to make life better for people in small businesses and their advisors.
"Planday’s workforce management platform helps small businesses to respond to the rapidly changing nature of work," he said.
"Planday also addresses the growing need for flexibility and rising compliance demands within the workplace."
Planday CEO Christian Brøndum said his company's mission fitted perfectly with Xero’s passion for smal lbusinesses, for people, for growth and for communities.
"We’re looking forward to working within the Xero family to build a strong launchpad for businesses and employees to manage their time and joint potential."
The acquisition was expected to contribute around three percentage points of additional operating revenue growth for Xero in its 2022 financial year.
Xero said when combined with an accounting solution, such as Xero, Planday was able to provide insights to a business or its advisor that help them to adjust staffing levels to match trading conditions and control labour costs, which were often an employer’s largest expense.