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August 10, 2020

Western Union looking to acquire weaker rivals amid Covid-19 crisis

Western Union is planning to buy weaker rivals in the wake of the situated created by the Covid-19 pandemic, the Financial Times has reported.

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In an interview, Western Union chief Hikmet Ersek said: “I am pretty active on the M&A front. Our financial position is much better than many competitors. We have a good cash flow position even through Covid-19, and some competitors struggle.”

The Colorado-based money transfer giant intends to capitalize on its cash position to buy smaller competitors.

In the second quarter ended June, the company had $1.2bn of cash on its balance sheet. It reported pre-tax profits of $193m, a year-on-year slump of 74%.

In June, Western Union made an offer to buy MoneyGram. The company did not provide any updates on the potential bid while announcing its results.

However, Ersek said that any future deals will be part of the company’s digital strategy and may create cost synergies.

During the pandemic, the company launched online tools to compete with digital banks like Revolut and Remitly.

Western Union was also able to contain its revenue fall to 17%.

Currently, out of the $600bn-a-year global remittances market, Western Union has a market share of 12-13%.

Ersek said: “The market has become extremely diverse, in the last four or five years, there are so many fintech companies.

“In the past, everybody talked about Western Union and MoneyGram merging; now people talk about Western Union and others.

“If we acquire another competitor, maybe we are 13%, 14%. I don’t think it’s the question of an acquisition being big.”

MoneyGram is valued at about $220m, while Western Union is valued at $9.6bn.

Last week, Western Union has deepened its partnership with Brazilian financial institution Banco SEMEAR.

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Navigate your business through the ‘new normal’

COVID-19 continues to dominate headlines the world over. It has already affected our lives forever. The way we work, shop, eat, seek medical advice, and socialize will all be different in the future. Quite how different remains to be seen, but all industries must plan for multiple eventualities.  Faced with an explosion of conflicting information on how to plan and implement successful recovery strategies, decision-makers are in dire need of a single, reliable source of intelligence.   GlobalData’s COVID-19 Executive Briefing gives you access to unparalleled data and insights to successfully navigate the uncertain road to recovery across the world’s largest industries. Understand every aspect of this disruptive theme by delving into: 
  •  COVID-19 infection update, with statistics on the spread, testing by country, as well as the latest data on vaccines and therapeutic developments 
  • Economic impact overview, covering stock market indices, GDP, unemployment rates, policy responses & GlobalData’s economic recovery scorecards 
  • Sector developments, with access to sector insight summaries, cross-sector indices and the leaders and laggards in each industry vertical 
Whatever your company’s imminent strategic plans, the long-lasting impact of COVID-19 must not be overlooked. Find out how to futureproof your business operations – download our report today. 
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