The shares of MoneyGram International Inc. (NASDAQ:MGI) skyrocketed on Monday and premarket session on Tuesday, as Bloomberg reported that Western Union (NYSE:WU) is looking to acquire the payments company.

What Happened

Western Union has made a takeover offer to MoneyGram, but an agreement is yet to be reached, people familiar with the matter told Bloomberg.

The deal, if finalized, will bring the two veteran money transfer companies together as they struggle to keep their businesses afloat.

MoneyGram has about $878 million in debt, according to Bloomberg, and the shelter-in-place orders imposed to curb the spread of the novel coronavirus (COVID-19) gave another setback to its payments infrastructure around the globe.

Chinese e-commerce giant Alibaba Group Holding Ltd.'s (NYSE:BABA) subsidiary Ant Financial had made an acquisition offer of $1.2 billion to MoneyGram in 2017, but President Donald Trump's administration blocked the deal amid rising tensions with the Chinese government, Reuters reported at the time.

Why It Matters

Western Union and MoneyGram have been losing ground to financial technology companies like PayPal Holdings Inc. (NASDAQ:PYPL), Square Inc. (NYSE:SQ), and Stripe, which provide faster transaction processing at reduced costs.

Online payment services offered by technology giants, including Alphabet Inc.'s (NASDAQ:GOOGL) (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) present further competition in the field.

Social media company Facebook Inc. (NASDAQ:FB) is planning to join the fray later this year with the Libra cryptocurrency, which will allow users of its and subsidiary WhatsApp and Instagram's platforms to make direct and quick payments.

Price Action

MoneyGram shares traded 50.58% higher at $3.41 in the pre-market session on Tuesday. The stock had closed the regular session 6.2% higher at $2.59.

Western Union shares were up 6.2% in the after-hours at $22 after closing the regular session 3.5% higher at $20.71.