Alibaba affiliate Ant Financial agrees to buy MoneyGram

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A Moneygram logo is seen outside a bank in Vienna, Austria, June 28, 2016. REUTERS/Heinz-Peter Bader

(Reuters) Ant Financial Services Group, an affiliate of Chinese e-commerce firm Alibaba Group Holding Ltd (BABA.N), said on Thursday it would buy U.S. money-transfer company MoneyGram International Inc (MGI.O) in a deal valued at about $880 million.

The offer of $13.25 per share is pitched at a premium of 11.5 percent to MoneyGram’s Wednesday’s close of $11.88.

But the Dallas-based MoneyGram’s shares were trading at $15.50 before the opening bell, up about 31 percent.

Ant Financial said it would assume or refinance MoneyGram’s outstanding debt, which stood at $937.3 million on a net basis as of Sept. 30, according to a regulatory filing.

MoneyGram’s biggest shareholder, Thomas H. Lee Partners, which has a 44.5 percent stake in the company, has agreed to vote in favor of the deal, the companies said.

MoneyGram has a global network of about 350,000 locations where money transfers are sent and received.

Ant Financial, whose anchor business is Alipay, China’s largest online payments service, was spun off from Alibaba in 2011.

Alex Holmes will remain MoneyGram’s chief executive and the company will continue to be based in Dallas, the companies said.

Ant Financial has said it plans an initial public offering this year, although a timetable or location for its listing have not been determined.

Citi is Ant Financial’s financial adviser, while Simpson Thacher & Bartlett LLP is its legal adviser.

MoneyGram is being advised by BofA Merrill Lynch and legal firm Vinson & Elkins LLP.

The Wall Street Journal reported earlier on Thursday that a deal was close.

The companies said the acquisition was expected to close in the second half of 2017.

(Reporting by Nikhil Subba and Richa Naidu in Bengaluru; Editing by Martina D’Couto and Ted Kerr)

 

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