angelfunding

MoneyGram Gets a Sweetened Deal from China

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April 18, 2017

The US fintech firm MoneyGram has received an increased buyout deal from China’s Ant Financial. The reports suggest the Chinese company increased its bid to buy the fintech firm by 36%, but regulatory hurdles are still on the horizon.

 

Improving the bid to acquire the fintech firm

 

Ant Financial, which is an Alibaba subsidiary, has offered to buy MoneyGram’s shares for $18 per share, giving the electronic payment firm a total valuation of $1.2 billion. The offer has gone up by 36% from the $13.25 share price the Chinese company had previously proposed for the US firm.

 

Furthermore, it’s higher than a rival bid made by Euronet Worldwide last month. The company offered to buy MoneyGram for $15.20 per share. However, Euronet Worldwide might not have to bury its buyout dreams just yet, as the deal with it would be more agreeable in terms of the regulatory authorities in the US.

 

Ant Financial and MoneyGram have released a statement saying they are making progress and they hope to close the deal this year.

 

Pamela Patsley, executive chairman of MoneyGram, said the company continues “to be excited about the transaction, which we are confident will provide substantial benefits to all of our stakeholders, including stockholders, customers, agents and employees”.

 

Ant Financial is an Alibaba subsidiary and it has approached the fintech sector with a holistic approach in recent months. It recently announced a Joint Venture in Indonesia to provide customers with payment and financial services. The firm is set to increase its customer acquisition and the acquisition of MoneyGram would be another sweet deal for the firm.

 

The regulatory hurdles ahead

 

The Chinese company is yet to receive a go-ahead from the US Committee on Foreign Investment (CFIUS), which is the country’s regulatory arm on acquisitions that might have a national security element to them.

 

CFIUS has been a problem for many Chinese firms interested in US companies, especially in the technology sector. The hurdle might be especially troublesome now that tensions between China and the US are rising due to trade and foreign policy disputes.

 

Ant Financial has already taken steps to allay concerns. On Monday, it told it wouldn’t start collecting data on MoneyGram’s US users on non-US servers. It has also guaranteed the unit will remain separate from Ant Financial. The server guarantee is a slight swipe at Euronet, which has said the location of the servers would be irrelevant.

 

One of the world’s biggest firms in the market

 

The deal is lucrative for Ant Financial, as it would provide it with an access to new markets. MoneyGram is among the world’s biggest remittance market players and it could help the Chinese company build a cross-commerce border network.

 

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

 

MoneyGram operates from its Dallas headquarters, although its services are available in 200 countries.

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