MoneyGram (MGI) Up Nearly 9% Since News of Alibaba Acquisition

Alibaba Group Holding LTd (NYSE:BABA) affiliate, Ant Financial Services Group, agreed to merge with MoneyGram International (NASDAQ: MGI) today, January 25, 2017. This is in wake of the ongoing dominance Ant Financial has in China as being the largest premium third party payment platform.

The transaction will connect MoneyGram’s money transfer network of 2.4 billion bank and mobile accounts and 350,000 physical locations with Ant Financial’s users, who enjoy a broad suite of technology-based financial services, including payments, credit and insurance products. The combination will provide consumers in over 200 countries and territories with convenient and accessible financial services.

The merger is valued at approximately $880 million for all of MoneyGram’s common and preferred shares, priced at $13.25, on a fully diluted basis and Ant Financial will assume or refinance MoneyGram’s outstanding debt. The per share consideration represents a premium of approximately 20 percent to MoneyGram’s volume weighted average share price over the prior three month period. The transaction has been approved by the MoneyGram Board of Directors. Upon completion of the transaction, MoneyGram will retain the MoneyGram brand name and management team and will remain headquartered in Texas.

On the merger, Ant CEO Eric Jing said, “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.”

This would be Ant Financial’s second acquisition in the United States. Last year, the company bought EyeVerify, a maker of optical verification technology used by U.S. banks. It has been reported that Ant is going down the IPO path, but wants to focus on strong international growth first. Jack Ma, executive chairman of BABA, to which Ant Financial is an affiliate, said, “For IPO, for where, how and when, we haven’t figured it out yet. But I know someday, we will be going for it.” That comment and two acquisitions certainly substantiate that.