Cryptocurrency company Ripple today announced an investment of up to $50 million into money transfer company MoneyGram. Along with the investment, MoneyGram will agree to utilize XRP in its core money transfer business.
Ripple's initial investment will consist of the company paying $4.10 per share for up to a 10% stake of MoneyGram, or $30 million. The valuation of ~$300 million would be a significant comedown from the $1.2 billion deal that China's Ant Financial struck to purchase MoneyGram in 2017, which was blocked by the Trump administration. MoneyGram would also hold an option for an additional investment of up to $20 million by Ripple in the next two years.
Ripple's investment at $4.10 per share is a significant premium to the $1.45 price per share that MoneyGram traded at today. $MGI jumped 114% in after hours to $3.10 as of 5:08pm EST.
Ripple has long sought to drive adoption of the XRP cryptocurrency, of which the company is the creator and largest owner, via tokens held in escrow and released quarterly. To date, the company has succeeded in attracting large financial institutions to trial its xCurrent product which doesn't involve the XRP currency in the money flow.
Today's deal with MoneyGram ensures that Ripple's xRapid, which utilizes XRP in the money flow, will be used in global money transfers at scale for the first time. MoneyGram rival Western Union recently ended a trial of xRapid, stating that the product had not created any material savings for the company.