One of the first major FinTech deals of the year lands with a bang — and a cross-border one at that.
Ant Financial Services Group of China is paying $880 million to buy MoneyGram, the U.S.-based money transfer firm. The $13.25 a share that it shakes out to is about a 12 percent premium to MoneyGram’s trading price at the close of business on Wednesday (Jan. 24).
The transaction itself shows Ant Financial, which operates as an affiliate of Alibaba Group Holding, the eCommerce giant, making inroads into the United States, which has been a goal of the parent company. The Wall Street Journal noted that Ant has a $60 billion valuation and had raised $4.5 billion in its most recent fundraising round. The inroads into the U.S.-based business are an extension of the position that Ant Financial’s Alipay maintains as China’s leading online payments conduit.
This is not the first flag planted on U.S. soil via acquisition for Ant. Last September the Chinese firm bought EyeVerify, a mobile eye recognition tech firm that operates stateside.
As for MoneyGram, that firm is in partnership with about 350,000 locations across 200 nations via banks and retail outlets to allow for individual remittances within countries and across borders. The money flow has become increasingly digital in nature, across mobile apps. Amid tough competition, noted the WSJ, from Western Union and tech startups, MoneyGram had been considering a sale beginning in 2013 and after a 2014 restructuring focused on margins.