Stocks of money-transfer company Moneygram International (NASDAQ:MGI) surged by 8.75% after news of merger deal with Alibaba (NYSE:BABA) payment affiliate Ant Financial.
The payment affiliate of Alibaba Group Holding Ltd. Ant Financial announced its plans to acquire US money-transfer company MoneyGram International Inc. MoneyGram and Ant Financial officially announced on Thursday that the two companies reached an agreement to merge the US company with Alibaba’s payment subsidiary company. MoneyGram shareholders were offered $13.25 per share in cash, or total value of $880 million.
MoneyGram Stock Surge
Following the acquisition deal, MoneyGram experienced a sudden boost in its stock in the Nasdaq Stock Market. The stock closed at $12.92 on Thursday, 8.75% higher from its previous session rate which gapped from $11.88. Its market capitalization was at $691.16 million. Prior to the news release, MoneyGram stock was trading around $11.70 - $11.80 per share in the market for the past week.
In the past 12 months, MoneyGram’s stock has already doubled in value. Its trading value from the same period last year was only at $5.15 per share and was performing moderately throughout three quarters of 2016.
Last October 2016, MoneyGram shares started surging after experiencing a pinch indicated on the Bollinger Band® indicator starting from September to end of October. From then on, the band has expanded and displayed a wider price range possibility of the company’s stock.
The buyout offer from Ant Financial has opened new opportunities for MoneyGram, which ultimately gave a boost to the company’s stock performance in the market.
Meanwhile, Alibaba shares were down by 1.30% to $102.71 per share during the Thursday trading session.
Transaction Details
Both Ant Financial and MoneyGram published the news release regarding the acquisition deal, which was valued at $880 million, or $13.25 per share, which is 11.5% higher than the company’s Wednesday closing price. Ant Financial will absorb or refinance any remaining debt from MoneyGram after the transaction. CEO of Ant Financial Eric Jing stated:
We believe financial services should be simple, low-cost and accessible to the many, not the few. The combination of Ant Financial and MoneyGram will provide greater access, security and simplicity for people around the world to remit funds, especially in major economies such as the United States, China, India, Mexico, and the Philippines.
With the acquisition, Ant Financial will have access to MoneyGram’s money transfer network of 2.4 billion bank and mobile accounts, along with the 350,000 physical locations of the company.
MoneyGram will retain its operation in their Dallas headquarters.
Ant Financial is presently the leading online payment company in China and provides its services to 630 million users, including 450 million from AliPay and 180 million through India’s mobile payment provider Paytm.
Meanwhile, the merger deal has already been approved by MoneyGram Board of Directors. Thomas H. Lee Partners, who owns around 46% of the MoneyGram’s shares, has joined the discussion and voted in favor of the deal with Ant Financial.
MoneyGram is still awaiting approval from its stockholders and other necessary regulatory approvals and other closing procedures. The deal is expected to close in the second half of the year.