Which way will MoneyGram go?

Which way will MoneyGram go?

Money transfer giant MoneyGram can give further consideration to Euronet’s surprise bid to acquire the company from under the nose of Ant Financial, reports Paybefore (Banking Technology‘s sister publication).

Ant Financial entered a definitive agreement to buy MoneyGram earlier this year.

The unsolicited proposal from Euronet, received on 14 March, has been determined by MoneyGram’s board to potentially comprise a “company superior proposal”, as defined in MoneyGram’s agreement with Ant Financial.

That means MoneyGram can take certain actions to further consider the Euronet proposal – including engaging in direct discussions with Euronet about a potential sale – without violating terms of the original agreement with Ant Financial. MoneyGram says came to this conclusion “after consultation with its outside legal and financial advisors”.

Euronet’s offer calls for the payments processor to acquire all outstanding MoneyGram shares for $15.20 in cash, resulting in a $1 billion deal. Ant Financial – the online and mobile financial services affiliate of Chinese e-commerce powerhouse Alibaba Group – offered about $880 million to acquire MoneyGram in a deal that was expected to close in H2 2017 after being approved by MoneyGram’s board of directors in late January this year.

Despite the higher dollar amount of the Euronet proposal, MoneyGram’s board of directors has not changed its recommendation in support of the Ant Financial deal, and is not making any recommendation with respect to the Euronet proposal.

“There can be no assurance that the board of directors will ultimately determine that the Euronet proposal is a company superior proposal, that the terms of any transaction will be the same as those reflected in the Euronet proposal or that any transaction with Euronet will be agreed to or consummated,” MoneyGram states.

Along with more money, Euronet is offering MoneyGram what it claims is a faster path to closing. Because Euronet is based in Kansas, its acquisition of MoneyGram wouldn’t need to be approved by the Committee on Foreign Investment in the US. It also would be easier for Euronet to take over MoneyGram’s money transmitter licenses in the US than for China-based Ant Financial to do so, Euronet claims.

UPDATE 22 March 2017

Ant Financial is considering whether to make a higher offer for MoneyGram.

According to Bloomberg, Ant Financial has four days to make a formal response to the offer. Douglas Feagin, head of international operations at Ant Financial, says he’s “confident” the deal will go through.

“It’s likely that Ant Financial will either counter the bid with a higher offer, or say that it will wait until Euronet finishes carrying out its due diligence before delivering a rival bid, according to a person familiar with the negotiations,” says Bloomberg.