The parent company of global mobile payment platform Alipay has agreed to purchase MoneyGram for approximately $880 million, according to a press release.
Alipay's parent, Hangzhou, China-based Ant Financial Services Group, is offering the shareholders of Dallas-based MoneyGram $13.25 per share in cash, the announcement reported. The price represents a 20% premium over MoneyGram's volume-weighted average share price over the prior three-month period. Ant Financial Services Group is an affiliate of Chinese e-commerce giant Alibaba Group and focuses on serving small and micro enterprises and consumers.
“We believe financial services should be simple, low-cost and accessible to the many, not the few,” Ant Financial CEO Eric Jing said. “The combination of Ant Financial and MoneyGram will provide greater access, security and simplicity for people around the world to remit funds, especially in major economies such as the United States, China, India, Mexico and the Philippines.”
MoneyGram, a large competitor in the global remittances business, said it will stay in Dallas and operate under its existing brand.
The deal will combine MoneyGram's money transfer network, which reportedly has 2.4 billion bank and mobile accounts and 350,000 physical locations in 200 countries and territories, with Ant Financial's more than 630 million users — including 450 million with Alipay and 180 million with affiliate Paytm, which is a popular e-commerce and payment provider in India. The deal could increase MoneyGram's transaction volume in the Asia-Pacific region as well, according to the release.
MoneyGram, which also offers bill pay services, money orders and processes official checks in some markets, is expected to maintain and grow its U.S.-based workforce, according to the announcement.
“MoneyGram can now accelerate and expand our suite of global hybrid solutions and integrate an even larger digital and physical network, making money transfers easier for customers and providing a wider selection of services for the agents who serve them around the world. Ant Financial is an ideal partner for MoneyGram; together, we will be able to expand our business and, in doing so, offer more people around the world access to a reliable financial connection to loved ones,” MoneyGram CEO Alex Holmes said.
Last April, Ant Financial reportedly closed a $4 billion-plus funding round that pegged its value at around $60 billion, according to CNBC.
MoneyGram reported $1.4 billion in total revenue in 2015 and $1.125 billion in total revenue for the nine months ending Sept. 30, 2016, according to SEC filings.
Worldwide, people sent approximately $582 billion to relatives in other countries in 2015, a 2% decline from 2014, according to a Pew Research analysis of World Bank data.
“Cross-border payments services have not kept pace with the shift to a global economy and digital age, creating compelling opportunities for banks and nonbanks alike,” according to a forecast by global consulting firm McKinsey. The continuing shift to cashless transactions could grow transaction-related revenues, both domestic and cross-border, by approximately 7% annually, it said.
MoneyGram shareholders and regulators still need to approve the deal, which is expected to close in the second half of 2017.
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