Euronet challenges Alibaba's acquisition of PE-backed MoneyGram
US payment services company Euronet Worldwide has extended a buyout offer worth about $2 billion for NASDAQ-listed MoneyGram, contesting a bid made earlier this year by Alibaba Group’s PE-backed affiliate Ant Financial. The pending sale will provide an exit for Thomas H. Lee Partners (THL).
Earlier this year, MoneyGram accepted an offer from Ant Financial to buy all MoneyGram shares for $13.25 apiece in cash. The Chinese financial services company would also assume or refinance MoneyGram’s outstanding debt.
MoneyGram confirmed in a statement that it remained subject to its agreement with Ant Financial, but would consider its options with the competing bid. The previously agreed deal would value the business at $880 million.
Euronet’s offer prices MoneyGram shares at $15.20 apiece, representing a 15% premium to the Ant Financial bid and a 28% premium to the prior closing price of $11.88. It values MoneyGram at around $1 billion and would include the assumption of about $940 million of the company’s outstanding debt. MoneyGram stock spiked 27% following the announcement and last traded at $15.77.
Euronet said in a separate disclosure that its offer represented a faster path to closing since there would be no review by the Committee on Foreign Investment in the United States (CFIUS). It also said that its focus on independent agents and consumer payment solutions would complement MoneyGram’s experience with large retailers and national post offices.
Although most China-related transactions filed with CFIUS are cleared, approval has proven to be challenging in recent years for entities with US government contracts or technology deemed to be sensitive. China has held the top spot for the number of investments reviewed by CFIUS for the three years to 2014 and is expected to record an increase in activity when the agency’s 2015 figures are released.
MoneyGram offers bill payment services in the US and Canada and money transfer services globally, generating revenue from transaction fees and spreads on foreign-exchange rates. It spun out from its parent company Viad Corporation in 2004, one year after incorporation, and subsequently went public in the US.
The company ran into financial difficulty in 2008 and was rescued through a $1.5 billion recapitalization led by THL and Goldman Sachs. This included an equity commitment of $760 million for a 70% interest in the business. THL is currently the largest shareholder in MoneyGram with a 44.5% stake.
Ant Financial was established in October 2014 and originated from Alipay, Alibaba’s third-party payment platform, which was launched in 2004. It provides other financial services under the Ant Fortune, Zhima Credit and MYbank brands. Last April, Ant Financial completed a $4.5 billion Series B round of funding at a valuation of $60 billion.
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