China’s Ant Financial Raises Bid for Fintech Firm, MoneyGram, by 36%

By Cate Cadell | April 17, 2017

China’s Ant Financial has sweetened its bid for MoneyGram International Inc by 36 percent, beating a rival offer to gain approval from the U.S. electronic payment firm’s board, although it still faces regulatory hurdles.

Ant, the finance affiliate of Alibaba Group Holding Ltd, increased its bid to $18 per share in cash from $13.25 to value MoneyGram at around $1.2 billion.

That compares with an offer of $15.20 per share from Euronet Worldwide Inc last month.

A successful deal would be Ant’s first major acquisition in a developed market. But first it needs to clear regulatory reviews, including one by the Committee on Foreign Investment (CFIUS), a U.S. inter-agency panel that looks at acquisitions for national security risks.

CFIUS has been a stumbling block for several Chinese deals in the United States and a deal with Euronet is likely to be more agreeable to U.S. policymakers amid rising tensions between China and the United States over trade and foreign policy.

Euronet has said that Chinese ownership could compromise the relationship between law enforcement and MoneyGram when investigating money laundering and “terrorist financing.”

Ant has sought to allay concerns and on Monday reiterated that any data collected on MoneyGram users in the U.S. will continue to reside on U.S.-based servers and that MoneyGram will operate as an independent unit. Euronet has previously countered that the location of the servers is irrelevant.

Ant and Moneygram said in a joint statement that they have made progress towards obtaining the regulatory approvals necessary to complete the transaction, including winning U.S. antitrust clearance. They are confident the deal will close this year, they added.

The news comes one day after sources said China’s Anbang Insurance Group will let its agreement to acquire U.S. annuities and life insurer Fidelity & Guaranty Life. for $1.6 billion lapse, after failing to secure all the necessary regulatory approvals.

While Anbang’s acquisition had received clearance from CFIUS it could not get past some U.S. state regulators.

Dallas-based MoneyGram is one of the biggest firms in the global remittance market, offering services in around 350,000 stores across 200 countries and offers Ant a major leg-up in its plans to build a cross-border commerce network, centered in Asia.

“The promotion of global digital financial inclusion requires global infrastructure. MoneyGram offers that connectivity between developed and developing markets,” said James Lloyd, Asia Pacific Fintech leader at EY.

Last Wednesday, Ant and Indonesia’s Elang Mahkota Teknologi (Emtek) agreed to launch a joint venture to roll out mobile payments in Indonesia. The tie-up follows recent investments in payment firms in India, Thailand, South Korea and the Philippines.

Ant, which is planning an IPO, was valued at around $60 billion in mid-2016, according to a source familiar with the matter. It has since had another financing round which raised $3 billion, a separate sources has said, although latest valuations were not immediately available.

(Reporting by Cate Cadell and Miyoung Kim; editing by Edwina Gibbs)

Topics Insurtech

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