Ant still ex­pects to take over MoneyGram de­spite ri­val bid

China Daily (Canada) - - VIEWS - By HE WEI in Shang­hai hewei@chi­

Ant Fi­nan­cial Ser­vices Group said on Wed­nes­day it still ex­pected to take over money-trans­fer net­work MoneyGram In­ter­na­tional Inc by the sec­ond half of 2017, de­spite an un­ex­pected coun­ter­bid by a US com­peti­tor, which an­a­lysts said could threaten the deal.

Ant Fi­nan­cial did not elab­o­rate­howit plans to close the deal on sched­ule, af­ter US-based Euronet World­wide Inc of­fered a higher bid on Tues­day and ar­gued that an all-US deal would avoid reg­u­la­tory scru­tiny to­ward for­eign bid­ders.

“MoneyGram and Ant Fi­nan­cial con­tinue to work co­op­er­a­tively un­der the terms of our merger agree­ment, and to­gether, we are mak­ing progress on sched­ule to­ward ob­tain­ing all re­quired reg­u­la­tory and share­holder ap­provals,” Ant Fi­nan­cial said in a state­ment.

An­a­lysts said the coun­ter­bid po­ten­tially marked the first ma­jor im­ped­i­ment en­coun­tered by the Chi­nese dig­i­tal pay­ment leader in its in­creased move to buy for­eign as­sets, but would not thwart its long-term over­seas am­bi­tions.

MoneyGram said on Wed­nes­day its board has not changed its rec­om­men­da­tion in sup­port of the agree­ment with Ant Fi­nan­cial. How­ever it added that it would care­fully re­view and con­sider the pro­posal by Euronet and de­ter­mine what would best serve the in­ter­ests of the com­pany and share­hold­ers.

Ant Fi­nan­cial is China’s big­gest in­ter­net-fi­nance con­glom­er­ate, with its on­line pay­ment and es­crow ser­vice, a money-mar­ket fund, a credit-rat­ing sys­tem and an in­ter­net bank. It has set a tar­get to have 2 bil­lion cus­tomers glob­ally over the next decade.

Fol­low­ing its ac­qui­si­tion of a stake in Paytm in In­dia and strate­gic in­vest­ment in As­cend Money in Thai­land, Ant Fi­nan­cial con­tin­ued its global push in Jan­uary by of­fer­ing to pur­chase MoneyGram for $880 mil­lion in cash, or $13.25 per share. But Euronet trumped Ant Fi­nan­cial’s bid by of­fer­ing $15.20 per share.

The Ant buy­out would also need green light from watch­dogs in­clud­ing the Com­mit­tee on For­eign In­vest­ment in the United States.

The pol­icy cloud has given an edge to Euronet, whose CEO Michael Brown said its its of­fer was su­pe­rior to that of Ant Fi­nan­cial’s be­cause the lat­ter was “fraught with un­cer­tainty and chal­lenges at ev­ery level”.

“The Ant Fi­nan­cial deal has to be de­layed, as MoneyGram’s board has the fidu­ciary duty to as­sess the new of­fer and de­cide whether it is su­pe­rior to the old one,” said Ling Xiao, part­ner of Huiye Law Firm, which spe­cial­izes in over­seas in­vest­ment and fi­nanc­ing.

What­ever the re­sult, how­ever, the cur­rent set­back would not hin­der Ant Fi­nan­cial’s broader over­seas goals, said Li Chao, an an­a­lyst with IT con­sul­tant iRe­search Con­sult­ing Group.

“Even if it failed, it’s a stand-alone case for Ant Fi­nan­cial. It will con­tinue to push ahead with part­ner­ships and in­vest­ments be­yond China’s bor­ders, both for busi­ness growth and for a de­cent pro­file ahead of its an­tic­i­pated ini­tial public of­fer­ing,” Li said.

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