China’s Ant Financial outbids rival for MoneyGram

China’s Ant Financial has sweetened its bid for MoneyGram International 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.

Ant’s plans to expand globally with the acquisition of one of the biggest firms in remittances hit a major snag in March, when US-based Euronet Worldwide made an unsolicited offer and openly lobbied US legislators, saying Ant’s proposal created a national security risk.

The finance affiliate of e-commerce giant Alibaba Group Holding hiked its bid 36% to $18 per share in cash, valuing MoneyGram at about $1.2bn.

The new offer handily beats the $15.20 per share proposed by Euronet and represents a 9% premium to MoneyGram’s last traded share price on Thursday.

Euronet declined to comment on Ant’s fresh bid.

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 in the US (CFIUS), which looks at acquisitions for national security risks. CFIUS has been a stumbling block for several Chinese deals in the US and a deal with Euronet is likely to be more agreeable to US policy makers amid rising tensions between Washington and Beijing over trade and foreign policy.

Analysts said, however, that while CFIUS could hold up any agreement, it was not necessarily a deal-breaker given 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 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 had made progress towards obtaining regulatory approvals, including winning US antitrust clearance and were confident the deal would close in 2017.

The news comes one day after sources said China’s Anbang Insurance Group would let a plan to acquire US annuities and life insurer Fidelity & Guaranty Life for $1.6bn lapse, after failing to secure necessary regulatory approvals.

While Anbang’s acquisition had received clearance from CFIUS, it could not get past some US state regulators.

Other analysts said 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.

The deal would follow recent Ant investments in payment firms in India, Thailand, South Korea and the Philippines.

Last Wednesday, Ant and Indonesia’s Elang Mahkota Teknologi agreed to launch a joint venture to roll out mobile payments in Indonesia.

Ant, which is planning an IPO, was valued at about $60bn in mid-2016, according to a source familiar with the matter.

It has since had another financing round that raised $3bn, a different source has said.

MONEYGRAM PROVIDES SERVICES IN 200 COUNTRIES AND WOULD BE ANT’S FIRST MAJOR DEAL IN THE WEST