Shares of The Western Union Company (NYSE: WU) are likely to open higher tomorrow after the company announced that it has acquired a 15% stake in the digital payments unit of Saudi Arabia’s STC Group for $200 million.
The acquisition of the Saudi Telecoms Company (STC) digital payments unit (STC Pay) values the unit at 5 billion riyals ($1.3 billion) making it a unicorn, that is, a startup worth over $1 billion.
STC Group chairman Mohammed bin Khalid Abdullah Al Faisal said the investment reflected the company’s position as a “digital enabler”. He added that the deal created the first “Saudi unicorn and the first fintech unicorn in the Middle East”.
STC pay has over 4.5 million users and is the first fintech company to be licensed by the Saudi Arabian Monetary Authority, and the Saudi central bank. The digital payments app is part of the Saudi government’s effort at reducing the country’s reliance on physical transactions.
The telecoms company is also planning to sell shares in its product and services development arm known as Solutions by STC after sources familiar with the deal told Reuters that the company has hired banks to arrange a potential initial sale of the unit’s shares.
Western Union share price
Western Union shares are down 21% this year as the legacy money transfer company faces stiff competition from digital payments firms.