January 26, 2017
By John Stewart
The company behind the rapidly growing Alipay mobile-payment service is acquiring the second-largest U.S. based money-transfer company. China-based Ant Financial Services Group’s deal to buy Dallas-based MoneyGram International Inc. for $880 million in cash will likely close some time in the second half of the year , according to an announcement released Thursday morning.
MoneyGram, second in the U.S. market only to money-transfer behemoth The Western Union Co., will continue to operate under the MoneyGram brand and will remain headquartered in Dallas, according to the announcement. The combination with Ant Financial is expected to give the company access to 630 million new accounts in the Asia-Pacific sector, including 450 million users of Alipay and another 180 million customers of Paytm, a mobile-payment provider in India with which Ant Financial has a partnership agreement.
Alipay, Ant Financial’s mobile-wallet subsidiary, serves chiefly Chinese consumers, but recently it has concluded deals with U.S. companies such as terminal maker VeriFone Systems Inc. to broaden payments access in the U.S. for users who travel to the U.S. The American market generates more remittance volume than any other country, with $53.6 billion in outflow annually, according to World Bank figures released in 2015.
“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," said Eric Jing, chief executive of Ant Financial, in a statement.
Calling Ant Financial “an ideal partner,” MoneyGram chief executive Alex Holmes said Ant’s resources and digital connections will enable faster growth at MoneyGram. "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,” he said in a statement.
Holmes, who will remain chief executive, is expected to work with two key Ant Financial executives, Douglas Feagin, senior vice president, and Souheil Badran, general manager for North America. Badran’s responsibility includes the availability of Alipay in the U.S. for millions of Chinese visitors who come to the country annually.
The deal’s value works out to a per-share price of $13.25 and places a 20% premium on MoneyGram’s volume-weighted average share price for the three months leading up to the agreement. The company’s board has approved the deal, which now awaits the approval of shareholders and regulators.
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