Alibaba’s financial services arm Ant Financial is further extending its roots into the U.S with its latest acquisition. The company has today announced that it will acquire MoneyGram, a U.S-based world leader in money transfer services. The transaction amount stands at a whopping $880 million, with each share valued at $13.25. The transaction is expected to close by the second half of 2017.
As for the merger, the services provided by Ant Financial and MoneyGram are complementary. The Dallas-based fintech giant will continue to operate independently under its own brand name. It will, however, connect their money transfer network of 2.4 billion bank and mobile accounts and 350,000 physical locations with Ant Financial’s users. This comes hand-in-hand with gaining a global presence and access to more than 630 million across the globe for MoneyGram. This will be extremely beneficial for both international partners.
Talking about the investment, Eric Jing, CEO of Ant Financial, says,
The acquisition of MoneyGram is a significant milestone in our mission to bring inclusive financial services to users around the world. We believe financial services should be simple, low-cost and accessible to the many, not the few.
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.
Ant Financial operates control over a wide gamut of finance technology products. The largest of the lot being their own digital wallet called AliPay, which has amassed over 450 million customers in China and its neighbors. It even holds a grip over India’s largest payments service Paytm, as Alibaba owns more than 40 percent of the same. This also brings into the mix more than 170 million from India as well.
Further, shedding light on the financial details of the transaction, Ant Financial will gain all of MoneyGram’s common and preferred shares on a fully diluted basis. It will also refinance the company’s debt while providing a 20% premium over the company’s average stock price for the last three months. It is currently trading at $12.92, over 8.75 percent up from its previous day price.
MoneyGram and Ant Financial now plan to work together on the integration of their platforms to capture the international landscape. The former can now accelerate and expand its suite of global hybrid solutions and integrate an even larger digital and physical network. This will make the money transfer process easier for customers by providing them with a wider selection of services in over 200 countries. Further, it will internationalize Ant Financial’s mission of financial inclusion by making their services convenient to access.
Alex Holmes, CEO of MoneyGram, also shares his excitement on the merger as under:
This transaction will significantly benefit consumers throughout the world who depend on innovative and reliable financial connections to friends and family. 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.
Alibaba’s financial services arm had been willing to expand internationally but agreeing and complying to the complex regulatory regimes is a mountainous task. But, with regards to its expansion plan and a recent visit to the Trump Tower, the company is now steadily scaling up to expand its reach beyond China, Thailand, and India.
Also, there has recently been reports that Ant Financial is looking forward to a public offering in the coming months. This merger will, thus, enable the company to capture and cater to a larger audience. This will entice investors to pump money into the finance arm and also make it a bombastic success like Alibaba’s IPO.