One of the world’s largest digital money movers could be getting bigger.
“I am pretty active on the mergers and acquisitions front,” CEO Hikmet Ersek told the newspaper. “Our financial position is much better than any competitors. We have a good cash flow position even through COVID-19, and some competitors struggle.”
Last week, WU reported second quarter (Q2) revenues fell for much of its business, while digital money transfer revenue grew 48 percent and 50 percent on a constant currency basis to a record high of $219 million for the period that ended June 30.
At the time, Ersek said despite the challenging global environment of the pandemic, WU will position the company for growth. The Denver-based digital platforms reported it had $1.2 billion in cash on its balance sheet at the close of Q2.
Ersek declined to comment on a recent Bloomberg News report about a potential bid to purchase rival MoneyGram that would combine two of the nation’s biggest digital platforms. WU’s market value is $9.6 billion and has more than 500,000 locations in 200 countries, while MoneyGram’s is valued at $220 million with 350,000 global locations.
“Western Union will have the opportunity to consolidate the MoneyGram volume to its platform and jettison duplicitous brick and mortar locations,” Sarah Grotta, director of the debit and alternative products advisory service at Mercator, told PaymentsSource.
Ersek told FT that any future deals would have to deliver cost savings and fit with WU’s digital strategy.
“In the past, everybody talked about Western Union and MoneyGram [merging], now people talk about Western Union and others,” he said.
Ersek said he is not waiting for a vaccine to pursue acquisitions. “It will take some time until we get a vaccine, I think the people are going to live with it,” he said.
The World Bank predicted global money transfers are expected to shrink by a record 20 percent this year, as immigrants who have been laid off or whose wages have fallen send less money home.
Still, Ersek argues immigration won’t stop despite reduced international travel.
“I am still unsure if there is a second wave coming, a third wave coming,” he said. “That’s the big question.”