China's Ant Financial abandons MoneyGram acquisition

MoneyGram – which is US-listed but counts Thomas H. Lee Partners (THL) as its largest shareholder – said that “extensive efforts” had been made to address the committee’s concerns. CEO Alex Holmes noted in a statement that the geopolitical environment has changed considerably since the transaction was first announced. In the absence of a deal, the two companies plan to collaborate on strategic initiatives involving remittances and digital payments.

Ant Financial approached MoneyGram in January of last year with an offer of $13.25 per share, valuing the company at approximately $880 million. Although the offer was accepted, MoneyGram said it would consider a challenging bid by Euronet. Euronet argued that its offer represented a faster path to closing since there would be no CFIUS review. It added that an acquisition by Ant Financial could compromise US financial infrastructure.

Ant Financial increased its bid to $18.00 per share in April – an 18% premium to the Euronet offer – and stockholders overwhelmingly voted in favor of the deal the following month. The plan was for MoneyGram to operate as an independent subsidiary of Ant Financial and retain its brand, management team, IT infrastructure and headquarters in the US.

While Ant Financial provides technology-based financial services such as payments, credit, and insurance products to an Asian audience, 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.

THL and Goldman Sachs led a $1.5 billion recapitalization for the company in 2008. This included an equity commitment of $760 million for a 70% interest in the business. THL is currently the largest shareholder with a 44.5% stake. MoneyGram posted revenue of $1.55 billion in 2016, up from $1.46 billion the previous year. Over the same period, it swung from a loss of $76.9 million to a net profit of $16.3 million.

CFIUS clearance has proven to be a challenge for China-related investments in recent years where the target companies have US government contracts or technology deemed to be sensitive. Canyon Bridge Capital Partners sought to win approval for its acquisition of Lattice Semiconductor last year by going over the committee’s head and appealing directly to President Donald Trump. He vetoed the deal.

More recently, US-based mobile marketing platform AppLovin terminated a planned $1.4 billion acquisition by Orient Hontai Capital, a PE unit of China’s Orient Securities, after a long delay in the regulatory approval process. It has opted for a debt-based deal instead.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• North America
• Financials
• Trade sale
• Regulation
• China
• USA
• Alibaba Group