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Why Alibaba’s Ant Financial May Be Interested in WorldFirst

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Jan. 9 2019, Updated 7:30 a.m. ET

Deal could be worth over $700 million

Alibaba’s (BABA) Ant Financial subsidiary is in talks to acquire British payment company WorldFirst, Sky News has reported, citing sources familiar with the matter. A deal could value WorldFirst at more than $700 million, according to the report.

WorldFirst was founded in 2004. It’s headquartered in London and operates offices around the world. WorldFirst mostly handles payments and currency exchanges for businesses and individuals.

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Extending international reach

Ant Financial may be interested in WorldFirst to help extend its international footprint. Ant Financial has been seeking to expand overseas to capture opportunities in areas such as mobile payments, business and consumer lending, and asset management. Its attempt to acquire American remittances provider MoneyGram (MGI) to accelerate its international expansion flopped last year after American regulators raised national security concerns.

The Ant Financial–WorldFirst merger talks come at a time when Amazon (AMZN) is also reportedly working on extending the reach of its in-house payment service, Amazon Pay, in a move that could increase competition for digital payment providers such as Ant Financial and PayPal (PYPL).

Ant Financial caused Alibaba a $132 million loss

Heavy investments in market share acquisition amid heated competition with Tencent’s (TCEHY) WeChat Pay resulted in Ant Financial seeing a loss in the third quarter. As a result, Alibaba absorbed a $132 million loss due to its interest in Ant Financial in its second quarter of fiscal 2018, which ended in September.

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