Why Shares of MoneyGram International, Inc. Jumped 10% Today

By Jordan Wathen Markets Fool.com

Image source: MoneyGram International, Inc.

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What happened

Shares of MoneyGram International, Inc. (NASDAQ: MGI) are up by about 10% as of 10:30 a.m. EST after the company announced that it would be acquired by an Alibaba (NYSE: BABA) affiliate, Ant Financial Services Group.

So what

The terms call for Ant Financial to pay $13.25 in cash for MoneyGram shares, an 11.5% premium to their closing price on Wednesday. MoneyGram announced that its board of directors approved the deal and that insiders and a private equity group that owns about 46% of the company agreed to vote in favor of the transaction.

MoneyGram expands AliPay's global footprint. The company listed 350,000 agent locations in over 200 countries and territories in its third-quarter presentation. Standalone money transfer businesses have been a hot commodity in recent years. PayPalacquired money transfer company Xoom in 2015.

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Now what

With MoneyGram shares trading at a mere 2% discount to the offering price, Wall Street is pricing in very little risk that the deal will fall apart. MoneyGram said in a press release that it expects the deal to close sometime in the second half of 2017.

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Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends PayPal Holdings. The Motley Fool has a disclosure policy.