SCRAMBLE FOR MONEY TRANSFER
Little-known firm vies with Jack Ma for Moneygram
SIX WEEKS after billionaire Jack Ma’s Ant Financial announced a plan to take over MoneyGram International, a little-known Kansas company is swooping in with a higher bid.
Euronet Worldwide is offering $15.20 (R199.84) a share for the money-transfer service, topping Ant’s $13.25 bid, according to a statement on Tuesday.
Shares of MoneyGram jumped 27 percent to $16.05 at 9.37am in New York trading, suggesting investors expect a bidding war. Euronet dropped 1.5 percent to $81.75.
Ant’s plan to take over MoneyGram was presented by the two companies as a fait accompli, with the deal expected to be completed this year once regulators approved it.
That acquisition is supposed to help Ant expand outside China and probably faces scrutiny from a Treasury Department agency that reviews foreign purchases of US companies.
Michael Brown, Euronet’s chief executive, said his bid is superior because it’s more likely to get approved.
“The Ant Financial transaction is fraught with uncertainty and challenges at every level,” Brown said. “We are committed and ready to move expeditiously.”
Since Brown helped found Euronet in 1994, the payments company based in Leawood, Kansas, has built a network of more than 35 000 ATMs and 800 000 point-of-sale terminals.
He has long coveted MoneyGram for its brand, bidding for it in 2008 and again in 2013.
The deal would allow both companies to offer more services at more locations and would save $60 million in cost synergies, according to a presentation on Euronet’s website.
Ant is a behemoth in China, where it serves more than 450 million customers and provides services from wealth management and insurance to credit checks and consumer loans.
Formerly a part of Alibaba Group, it is still controlled by Ma.
Ant was valued at $75 billion by Hong Kong investment group CLSA in September and is expected to go public this year.
Ant has been seeking to expand abroad as competition in its home market heats up, and the MoneyGram purchase was seen as a way to further that goal after recent partnerships with Paytm in India and Ascend Money in Thailand.
The Treasury Department’s Committee on Foreign Investment in the US (CFIUS) would probably scrutinise a deal between Ant and MoneyGram.
While CFIUS is unlikely to deem the MoneyGram takeover a national security threat, legal experts say the deal could face more inspection than usual given President Donald Trump’s anti-China rhetoric.
Andrew Jeffrey, an analyst at SunTrust Banks, said in a note to investors that Euronet’s proposal is “superior in all ways”. The offer is higher and the transaction would be more likely to close, he wrote.
A substantial portion of MoneyGram’s business could come under pressure from Trump’s stance on immigration and trade, because many immigrants use the firm to transfer money from the US to their families.
Trump proposed a plan last year to cut off the remittances Mexican immigrants send home. Mexico represents about 10 percent of MoneyGram transactions, according to intelligence. – Bloomberg