Company - - Jan 27,2017
E-commerce giant Alibaba’s digital finance company, Ant Financial, announced that it will be acquiring the US-based money-transfer company, MoneyGram International for $880 million.
Ant is the world’s largest financial technology company with more than 630 million users and dominates the large Chinese online payments market. This takeover will further expand its international presence as competition from local rival Tencent’s WeChat payment system is heating up.
MoneyGram operates more than 350,000 outlets in over 200 countries. The offer values Dallas-based company at $13.25 per share at a premium of 11.5 percent. Shares of MoneyGram were trading 9 percent higher after the announcement at $12.92. The company’s board of directors has already approved the deal.
Eric Jing, chief executive of Ant, said in a statement that this merger will provide greater access, security and simpler ways for people around the world to transfer funds, especially in major economies like the US, China, India, Philippines and Mexico.
Ant Financial has recently made tie-ups with Paytm in India and Ascend Money in Thailand to boost its international presence.
The deal also serves the interest of MoneyGram, since the company is under pressure from President Donald Trump’s stance on immigration and trade. A vast number of immigrants use MoneyGram to transfer money from the US to their families back home. Mexico itself represents about 10 percent of the company’s transactions.
This will be Alibaba’s second acquisition in the US within a year despite the rising tensions between China and the world’s biggest economy. Earlier, it purchased Missouri-based start-up company, EyeVerify, in a $70 million deal.
However, relations between President Trump and the founder and chairman of Alibaba, Jack Ma, have been quite positive. They met in December when later Trump said that he had a “great meeting” with Ma. Alibaba was also floated on the New York Stock Exchange by Jack Ma after this meeting.