Alibaba’s Ant Financial to acquire MoneyGram

Ant Financial Services Group, the world’s largest financial technology company, said on Thursday that it would acquire US money-transfer company MoneyGram International Inc. for about $880 million in a deal that is expected to shake up the international payments landscape.
Ant, the payment affiliate of Chinese e-commerce giant Alibaba Group Holding Ltd., dominates the online payments industry in China. With this acquisition it will significantly expand its presence overseas, as competition from domestic rival Tencent Holdings Ltd.’s Wechat payment system heats up.
The offer of $13.25 per share is at a premium of 11.5 percent to MoneyGram’s Wednesday’s close. MoneyGram’s shares were trading up nearly 9 percent at $12.92.
The companies said the deal would be subject to approval by the Committee on Foreign Investment in the United States (CIFIUS), a US inter-agency panel that reviews foreign acquisitions of domestic assets for national security concerns. CIFIUS has been a stumbling block for several Chinese deals in the US.
Ant’s acquisition of Dallas-based MoneyGram comes against a backdrop of rising tensions between China and the US over President Donald Trump’s willingness to re-evaluate key foreign policy conventions such as the “One China” principle. He has also threatened to impose punitive tariffs on Chinese imports.
Trump has, however, met with Jack Ma, the billionaire founder of Alibaba, since his election, describing Ma as “smart” and “open-minded.”
MoneyGram, alongside competitor Western Union Co., has long dominated the money transfer industry with its large network of retail locations. It has about 350,000 outlets in retail shops, post offices and banks in nearly 200 countries and territories.
Over the past few years, however, brick-and-mortar incumbents have been facing growing competition from more tech-savvy companies that are able to offer cheaper services online.
The combination of Ant’s technological expertise and MoneyGram’s large network of agents and established brand could be a game-changer for the industry by leading to more consumers, including migrant workers sending remittances home, to use online transfer services rather than taking cash to storefronts, experts said.
“The combination is a powerful one: Leading-edge technology with global reach and a significant physical footprint. Innovation and trust in one bundle,” said Warren Mead, global co-head of fintech at KPMG. 
“I expect to see the ever increasing convergence of fintech and the more traditional financial services sector.”

Source: Arab News