China’s Ant Financial has sweetened its bid for MoneyGram International Inc. by over a third, beating a rival offer to gain approval from the US electronic payment firm’s board, although it still faces regulatory hurdles, Reuters reports.
Ant’s plans to expand globally with the acquisition of one of the biggest firms in remittances hit a major snag last month when US-based Euronet Worldwide Inc. made an unsolicited offer and openly lobbied US lawmakers, saying Ant’s proposal created a national security risk.
The finance affiliate of e-commerce giant Alibaba Group Holding Ltd. hiked its bid 36 percent to US$18 per share in cash, valuing MoneyGram at around US$1.2 billion.
The new offer handily beats the US$15.20 per share proposed by Euronet and represents a 9 percent premium to MoneyGram’s last traded share price on Thursday.
MoneyGram’s shares hit a more than three-year high of US$17.83 in morning trading on Monday.
Euronet said on Monday that MoneyGram’s board rejected its offer on Sunday and went ahead with Ant’s revised offer.
Euronet said it planned to review the amended merger agreement between MoneyGram and Ant.
MoneyGram’s global remittance channels for sending money overseas would help Ant build a cross-border network after a string of recent investments in Asia.
But the deal must first clear the Committee on Foreign Investment (CFIUS), which looks at acquisitions for national security risks.
CFIUS has been a stumbling block for several Chinese deals in the United States and a deal with Euronet is likely to be more agreeable to US policymakers amid rising tensions between Washington and Beijing over trade and foreign policy.
Analysts said, however, that while CFIUS could certainly hold up any agreement, it wasn’t necessarily a deal-breaker since MoneyGram is likely to push for the deal given the sweetened offer.
“CFIUS may lengthen the process … I don’t think CFIUS would be a deal killer,” said Jeffrey Sun, Shanghai-based partner with law firm Orrick, Herrington & Sutcliffe.
Euronet has said Chinese ownership could compromise the relationship between law enforcement and MoneyGram when investigating money laundering and “terrorist financing”.
Ant has sought to allay those fears, reiterating on Monday that any data collected on MoneyGram users in the US will continue to reside on US-based servers and that MoneyGram will operate as an independent unit.
Ant and MoneyGram said in a joint statement they have made progress towards obtaining regulatory approvals, including winning US antitrust clearance and are confident the deal will close this year.
Other analysts noted that Ant was likely to already have Chinese regulators on-side given the high-profile nature of the deal.
“I assume there are reassurances being given,” said Zhi Ying Ng, Singapore-based senior analyst at Forrester.
Dallas-based MoneyGram provides services in 350,000 locations across 200 countries and would be Ant’s first major acquisition in the West.
A deal would follow recent Ant investments in payment firms in India, Thailand, South Korea and the Philippines.
Just last Wednesday, Ant and Indonesia’s Elang Mahkota Teknologi (Emtek) agreed to launch a joint venture to roll out mobile payments in Indonesia.
Ant, which is planning an initial public offering, was valued at around US$60 billion in mid-2016, according to a source familiar with the matter.
It has since had another financing round which raised US$3 billion, a separate source has said, although latest valuations were not immediately available.
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