In a path breaking deal, Ant Financial — a digital payment subsidiary of Alibaba group — acquired U.S.-based money transfer service MoneyGram for $880 million.

In a statement released by Ant Financial on Jan. 26, the company declared that both firms have entered a "definitive agreement" to merge MoneyGram with Ant Financial.

As a result of this deal, the stockholders of MoneyGram are being offered $13.25 per share in cash. Currently, MoneyGram has about 350,000 outlets in nearly 200 countries. Its 2.4 billion bank and mobile account holder will soon merge with Ant Financial's 630 million users to spread its network in the Asia-Pacific region.

"The acquisition of MoneyGram is a significant milestone in our mission to bring inclusive financial services to users around the world," stated Eric Jing, CEO of Ant Financial.

Jing went on to elaborate that the merger would provide simple financial services, accessible to all and at a low cost, especially in major economies like India, China, United States, Mexico, and the Philippines.

Transaction Details

MoneyGram's common and preferred shares were brought on a fully diluted basis by Ant Financial for $880 million. On completion of the transaction, MoneyGram will keep its brand name without any changes along with the existing management team.

The headquarters will continue to be in Dallas and Alex Holmes, CEO of MoneyGram, will retain his position even after the deal is closed. The acquisition is expected to close in the second half of 2017.

Holmes was quoted saying that the merger will significantly help consumers around the world, who depend on innovative and trustworthy financial connections for family and friends.

Alibaba Spreading Its Wings?

The merger and several others in recent times conducted by Jack Ma-owned Alibaba is a clear sign that he is trying to foray into the American market. This particular merger comes at a time when the Trump administration is banning visa applications from seven countries.

Even before his election, Trump was at loggerheads with China when he questioned whether United States' "One China Policy" should be continued. The particular comment did not go down well with the Chinese media.

However, after the December 2016 meeting of Jack Ma with Trump, all seems well with the latter who has been critical of China in the past.

The MoneyGram acquisition will be Alibaba's second deal in the United States, who in 2016, bought startup EyeVerify for $70 million.

EyeVerify is an e-commerce giant based in Missouri, which secures a user's online data using biometric authentication technology.

Photo: Mike Mozart | Flickr 

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