Shares of MoneyGram International, Inc. (NASDAQ: MGI) more than doubled on Tuesday after the firm announced that it would be partnering with the famed cryptocurrency Ripple. This partnership supports the companies’ shared goal of improving the settlement of cross-border payments by upping efficiency and cutting costs.
Essentially, MoneyGram said that it entered into a “strategic agreement” with Ripple, a provider of leading enterprise blockchain solutions for global payments that will enable it to use Ripple’s xRapid product, leveraging XRP in foreign exchange settlement as part of MoneyGram’s cross-border payment process.
Through this partnership, which will have an initial term of two years, Ripple will become MoneyGram’s key partner for cross-border settlement using digital assets. As part of this partnership, Ripple has made an initial investment of $30 million in MoneyGram equity, made up of common stock and a warrant to purchase common stock. And this is a sizeable amount considering MoneyGram’s market cap was roughly $82 million prior to this deal.
Also, Ripple may fund additional purchases of common stock or warrants of up to $20 million at a minimum price of $4.10 per share.
Alex Holmes, MoneyGram chairman and CEO, commented:
As the payments industry evolves, we are focused on continuing to improve our platform and utilizing the best technology as part of our overall settlement process. Through our partnership with Ripple, we will also have the opportunity to further enhance our operations and streamline our global liquidity management. Since our initial partnership announced in January 2018, we have gotten to know Ripple and are looking forward to further leveraging the strengths of both of our businesses.
Share of MoneyGram closed Monday at $1.45, with a 52-week range of $1.33 to $7.41. The consensus price target is $2.83. Following the partnership announcement, the stock was up about 139% to $3.47 in early-trading indications Tuesday.