Published: Fri, January 27, 2017
Economy | By Melissa Porter

China's Ant Financial agrees $880m deal to buy MoneyGram

According to MoneyGram's press release, the merger will connect MoneyGram's 2.4 billion bank and mobile accounts with Ant Financial's 630 million users, including 450 million Alipay users and 180 million Paytm users.

Ant Financial and MoneyGram did not immediately respond to requests for comment outside regular business hours. That represents an 11.5 percent premium to where shares in the money-transfer company closed on January 25. MoneyGram shares rose over 9% to just over $13/share on the news.

Ant Financial is offering only a small takeover premium to MoneyGram's recent trading level.

The deal could be one of the first tests of how serious President Donald Trump is about cracking down on money transfers, also known as remittances, to Mexico. President Trump. He hasn't tweeted anything about it yet, but this merger hits at two very sensitive topics for him: China encroaching on America's turf, and the big, handsome wall he wants built along the Mexico border to crack down on illegal immigration.

MoneyGram lets consumers and businesses send cash to one another, generating revenue from transaction fees and spreads on foreign-exchange rates. And if anything, the transaction could help shield MoneyGram from any repercussions of Trump's policies.

"Remittance is a great way for us to build a presence around USA consumers". MoneyGram and its larger rival Western Union, the dominant players in the global remittance industry, have been battling increased competition from cheaper digital alternatives such as PayPal's Xoom, WorldRemit and TransferWise.

Trump and Mexican President Enrique Pena Nieto are now scheduled to meet in Washington on January 31.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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