Alibaba’s digital payments arm, Ant Financial, is purchasing US-based MoneyGram at a proposed $880m deal price.
MoneyGram is located in nearly 200 countries and has a total of 350,000 outlets. Ant Financial user base is about 630 million.
For the Chinese e-commerce giant to make such a takeover, it will need the US Committee on Foreign Investment approval, reports BBC.
Before purchasing any domestic American asset by a foreign company, the inter-agency committee analyzes the whole process in the interest of national security.
While commenting about the sale, Ant Financial chief executive Eric Jing said that the two companies merging will hugely boost money remittance worldwide. He said that access, security and simplicity will be among the fast benefits in major economies such as China, US, Philippines, India and Mexico.
Chinese market has hugely embraced Ant Financial as an online payment platform. If the purchase goes through successfully, the company will be able to extend this lead overseas and battle-off Tencent’s WeChat payment system.
MoneyGram’s board of directors has already approved the takeover.
Politics and profits
The suggested deal comes at a time when China and the US are entangled in a number of disagreements.
During his campaign to the White House, Donald Trump questioned whether it is viable for the US to continue its “One China” policy. This was met with a lot of backlash from the Chinese state media. The President also from time to time threatened to impose punitive tariffs on Chinese imports.
This may have prompted Alibaba’s founder, Jack Ma, to hold a meeting with Mr. Trump December last year.
Mr Ma, who decided to float Alibaba on the New York Stock Exchange, described the meeting as a great one.
If this deal with MoneyGram becomes a success, this will be the second acquisition Alibaba will be making in the US. Last year the e-commerce giant purchased EyeVerify in a $70m deal.
EyeVerify makes use of biometric authentication technology to keep safe user’s online data and transactions.