Western Union Co. is seeking to acquire MoneyGram International Inc. in a transaction that would bring together two of the largest U.S. providers of money-transfer services, according to a person familiar with the matter.
Western Union has made a takeover offer for MoneyGram, said the person, who asked not to be identified because the matter isn’t public. No decision has been made and Western Union could opt to proceed without a deal, the person said.
Representatives for Western Union and MoneyGram declined to comment.
The business has been in decline as more people use online payments. Financial-technology upstarts have taken aim at the industry, offering strong new competition to established companies. Meanwhile, policy makers are intent on trimming the fees associated with moving money around the world.
MoneyGram rose as high as 74% in late trading Monday. The stock closed up 6.2% to $2.59, giving the company a market value of about $164 million. It also has about $878 million of debt. Western Union rose 3.5% to $20.71 for a market value of about $8.5 billion.
Dallas-based MoneyGram has struggled during the coronavirus pandemic, which has forced it to shutter operations around the globe as governments imposed shelter-in-place orders. While MoneyGram has boosted digital transactions, they made up just 18% of its money transfers in the first quarter, the company reported last month.
Last year, Facebook Inc. joined with companies from around the world to form the Libra Association to offer a new way to send payments overseas. At the time, the association lamented that low-income consumers often pay too much for financial services.
Governments and regulators around the world have long sought to cut the cost of remittances, which often cater to migrants who lack access to traditional bank accounts. On average, it costs $6.79 for every $100 in remittances sent overseas, according to data compiled by the World Bank.
Ant Financial Services Group, the Chinese financial services conglomerate, agreed to acquire MoneyGram in 2017 but abandoned the deal after pushback from national security regulators in the U.S.