In a breakthrough development, a cryptocurrency company Ripple will be investing up to $50 million in money transfer giant MoneyGram in next two years. According to Wall Street Journal report, Ripple has struck a deal with MoneyGram to buy a stake in the company.
As per the deal, Ripple will be spending $30 million to buy MoneyGram shares at a price of $4.10 each. At the time of the deal, MoneyGram shares were being traded at $1.45 which means that Ripple will be purchasing MoneyGram shares three times the current market value. In addition, MoneyGram will have an option of selling its shares to Ripple worth $20 million in next two years at the same price. Through this partnership, Ripple would be acquiring 8-10% of stake in money transfer giant. It is noteworthy to mention that MoneyGram will be using XRP token in its daily operations.
The deal will not empower Ripple to grab a seat on MoneyGram’s board at the outset. However, the blockchain payments startup will have an observer status.
Statements of the executives
The CEO of MoneyGram Alex Holmes said in a statement:
“It is imperative that we continue to improve our platform and provide the most effective solution to get funds from point A to point B”
In addition, he further added:
“Through Ripple’s xRapid product, we will have the ability to instantly settle funds from US dollars to destination currencies on a 24/7 basis. Moreover, it has the potential to revolutionize our operations and dramatically streamline our global liquidity management”
The CEO of Ripple Brad Garlinghouse was overjoyed at the partnership. He said that the deal between Ripple and MoneyGram will “greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency.”
Furthermore, he stated:
“This is a huge milestone in helping to transform cross-border payments and I look forward to a long-term, very strategic partnership between our companies”
Ever since U.S. government prohibited China-based Ant Financial from procuring MoneyGram, the company has faced financial losses. This deal will provide an opportunity to the company to recover from its financial losses.