Ant Financial raises offer for PE-backed MoneyGram

Ant Financial has increased its bid from $13.25 to $18 per share, which represents an 18% premium to the Euronet offer. According to a filing, the terms of the new bid would oblige MoneyGram to terminate all acquisition discussions with other parties. MoneyGram has now rejected Euronet’s offer and is expected to vote on the amended Ant Financial offer next month. 

The proposed transaction would value the company at about $1.2 billion compared to around $1 billion for the Euronet bid. Ant Financial will assume or refinance MoneyGram's outstanding debt. Shares in the company jumped about 7% following announcement of the new offer and last closed at $17.79.

“We plan to grow the US-based team and create even greater opportunities for the MoneyGram community as we pursue our shared vision of global inclusive finance in an increasingly digital era,” Doug Feagin, president of Ant Financial, said in a release. "As part of Ant Financial, MoneyGram will have access to resources to further enhance its technology, systems and anti-money laundering and compliance programs."

Ant Financial approached MoneyGram in January with an offer that valued the company at about $880 million. Although MoneyGram had accepted this offer, it confirmed that it would consider a challenging bid by Euronet of $15.20 per share, including the assumption of $940 million of its outstanding debt. 

Euronet said 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 has argued that an acquisition by Ant Financial could compromise US financial infrastructure. CFIUS clearance has proven to be a challenging hurdle for China-related investments in recent years related with US government contracts or technology deemed to be sensitive.

"The road ahead for MoneyGram remains highly uncertain in our view,” Michael Brown, chairman and CEO of Euronet said in a statement following the company’s rejection of the Euronet offer. “In light of bipartisan concerns that have been raised by four members of Congress, extensive public reports examining questionable data security practices of Ant Financial and broad concern raised over Chinese based acquirers, we continue to hold the view that the Ant deal may never close."

Ant Financial said in a disclosure last week that Euronet was seeking to encourage political interference in a commercial transaction by creating “phantom national security arguments." It continued by describing Euronet as a primarily European company that was not advancing a bid that served US interests.

Following the transaction’s expected completion later this year, MoneyGram is planned to operate as an independent subsidiary of Ant Financial and retain its brand, management team, IT infrastructure and headquarters in the US. Ant Financial said all of the company's current procedures and protections related to data security and personally identifiable information will remain intact.

MoneyGram was invested by THL and Goldman Sachs in 2008 as part of a recapitalization. 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.

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