So much for the "definitive" bit of the definitive agreement reached in late January between MoneyGram (NASDAQ: MGI) and Jack Ma’s Ant Financial, an Alibaba (NYSE: BABA) affiliate and Alipay's parent company. Euronet Worldwide (NASDAQ: EEFT), the Kansas-based electronic-payments provider behind money-transfer businesses Ria, IME, HiFX and XE, has offered to acquire MoneyGram for $15.20 per share in cash, valuing the target at more than $1 billion in addition to the assumption of its roughly $940 million in debt.
“The combination of our two companies ... offers stockholders a clear path to closing,” Euronet CEO Michael Brown said in a letter to MoneyGram’s board.
Ant Financial initially offered MoneyGram $13.25 per share in cash in a deal valued at roughly $880 million, a 20% premium over MoneyGram's price during the prior three-month period, along with the assumption of debt. Backed by the likes of Primavera Capital and the China Investment Corporation, Ant Financial's massive coffers make a counteroffer for MoneyGram almost a forgone conclusion.
The prospects of a review by the Committee on Foreign Investment in the United States, at a time of heightened trade tensions with China, poured cold water over Ant Financial's initial offer from the start. Some 20 different groups, including Tea Party Nation and the National Black Chamber of Commerce, opposed the deal on economic and national security grounds in a letter dated March 10 to US Treasury Secretary Steve Mnuchin, according to a Reuters report.
And the timing could hardly be worse for Ant Financial, as the company is in the process of raising $3 billion in debt to help finance new acquisitions, including its purchase of MoneyGram. Already one of the highest privately valued companies in the world, having raised a $4.5 billion round last April at a $60 billion valuation, Ant Financial has been looking to expand its footprint, perhaps setting the company up for an IPO, as the battle for market share in China heats up with rivals like Tencent's (HKG: 0700) WeChat payment platform, per Reuters.
MoneyGram operates a transfer network of 2.4 billion accounts and 350,000 physical locations. Investors welcomed the prospects of a bidding war for MoneyGram, pushing its shares up 24.6% on the news to close trading Tuesday at $15.77 apiece.