Alibaba Spin Off to Acquire MoneyGram for $880 Million
Ant Financial Services Group, the Alibaba Group affiliate formerly known as Alipay, announced the acquisition of major money remittance company Money Gram for $880 million. While already the online payments leader in China, this acquisition would greatly increase Ant’s international and U.S. presence, with the acquisition expected to close in the second half of the year.
Before their 2014 IPO, Alibaba spun Ant Financial Services Group off as a private company that would continue to operate the Alipay service. It has been estimated that more than half of online payments in China go through Alipay. In 2016, Ant held a private funding round that raised $4.5 billion, resulting in a company valuation comparable to American Express. Ant has plans to go public as well, but will likely wait until after the MoneyGram merger is complete.
MoneyGram’s largest stakeholder, a private equity firm with over 44 percent ownership, agreed to the terms the buyout at $880 million or $13.25 per share, representing a 12 percent premium over the price at the time. Ant will also assume over $900 million in outstanding debt.
MoneyGram will immediately boost Ant Financial Services Group’s presence not just in the U.S., but globally. The company has over 350,000 locations worldwide. Following the acquisition MoneyGram will continue to be headquartered in Dallas, Texas, and will continue to operate under the existing CEO.
The acquisition is still subject to approval by the Committee on Foreign Investment in the United States, which considers national security concerns when foreign firms acquire U.S. companies or assets.
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