June 25 (Reuters) - New Zealand accounting software

giant Xero ( XROLF ) agreed to buy New York payments provider Melio for

$2.5 billion, the companies said on Wednesday, accelerating the

Kiwi firm's push in the U.S. market with one of the country's

biggest outbound deals.

The deal fills a gap in Xero's ( XROLF ) offer by adding payments to

its accounting software while enabling both parties to scale up.

Australia-listed, New Zealand-headquartered Xero ( XROLF )

dominates its home markets but has been trying to grow in the

U.S. where it says it makes about 7% of sales.

The deal "enables a step change in our North America

scale and the potential to help millions of US (small-to-medium

businesses) and their accountants better manage their cash flow

and accounting on one platform", said Xero ( XROLF ) CEO Sukhinder Singh

Cassidy in a statement.

Xero ( XROLF ) forecast the buyout would double its 2025 financial

sales by 2028.

Melio co-founder and CEO Matan Bar said he was "excited

by our shared purpose to scale in the US and combine Xero's ( XROLF )

accounting capabilities with Melio's accounts payable and

receivable solutions".

Shares of Xero ( XROLF ) were suspended from trading on Wednesday

as the A$30 billion ($19.5 billion) market capitalisation

company asked institutional investors for A$1.85 billion to help

pay for the purchase, but analysts gave a cautious endorsement

of the deal.

"There is much to like in terms of bulking up US

exposure with a leading, fast-growing payments player and longer

term the proposed deal makes sense," said RBC Capital Markets

analyst Garry Sherriff in a client note.

"It will take time to process the intricacies of the

deal and the pathway forward."

E&P analyst Paul Mason said the buyout price "looks pretty

full for the stand-alone business but works if you think the

company can pull off strategic synergies around greater

distribution".

($1 = 1.5387 Australian dollars)