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Western Union Shares Likely to Rally on $200M Acquisition of Saudi’s STC Pay

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Simon Mugo

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

Tradingview chart of Western Union share price 22112020

Western Union shares are down 21% this year as the legacy money transfer company faces stiff competition from digital payments firms.

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Simon Mugo
Simon Mugo
Contributor

Simon ist Autor und Analyst für den Bereich Finanzwesen und blickt auf über sechs Jahre professionelle Erfahrung als Trader zurück. Er absolvierte einen Bachelor in Mathematik und Informatik und hat eine Leidenschaft für die Finanzmärkte. Simon handelt FX, Rohstoffe und Aktien. Er konzentriert sich auf Price Action Trading.