Alibaba’s digital payments arm, Ant Financial, is buying US-based MoneyGram for $880 million.
MoneyGram has about 350,000 outlets in nearly 200 countries while Ant Financial has more than 630 million users.
The takeover will need regulatory approval from the US Committee on Foreign Investment.
The inter-agency committee reviews foreign acquisitions of domestic American assets on grounds of national security.
Ant Financial CEO Eric Jing said in a statement that the marriage of the two companies 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”.
Ant Financial has a big market share in the online payments industry in China. The acquisition could help the company extend the lead as well as expand overseas, as competition is growing in China with rival Tencent’s WeChat payment system.
Moneygram’s shares rose by nearly 9% on the news. The takeover has been approved by MoneyGram’s board of directors.
Ant Financial’s shopping spree in the United States comes against a backdrop of rising tensions between China and the world’s biggest economy.
Before he took office, Donald Trump was questioning whether the US should continue its “One China” policy, sparking fury from Chinese state media. During his presidential campaign, he threatened to impose punitive tariffs on Chinese imports.
However, Jack Ma, the founder and chairman of Alibaba, held a meeting with Donald Trump in December 2016.
While Donald Trump has been critical of China, he said he had a “great meeting” with Jack Ma, who chose to float Alibaba on the NYSE. The share sale in September 2014 was a record-breaker, as the e-commerce giant raised $25 billion in its initial public offering.
If the MoneyGram deal goes through, it will be Alibaba’s second acquisition in the United States. In 2016, Alibaba purchased EyeVerify in a $70 million deal.
EyeVerify is a start-up based in Missouri, which uses biometric authentication technology for securing user’s online data and transactions.