With Its Surprise Higher Bid, Euronet Tries To Step on Ant’s Plan To Acquire MoneyGram

Euronet Worldwide Inc., owner of the Ria money-transfer service, early Tuesday announced a $1 billion bid to acquire Dallas-based MoneyGram International Inc. Euronet’s unexpected bid casts a cloud of uncertainty over the $880 million buyout offer China-based Ant Financial Services Group submitted for MoneyGram in January.

Leawood, Kan.-based Euronet called its offer “clearly superior” to Ant’s, saying it represents a 15% premium over Ant’s bid, a 28% premium over MoneyGram’s $11.88 closing share price on the last day of trading before Ant announced its offer, and a 38% premium over MoneyGram’s weighted share price in the three month’s before the Ant bid.

Euronet in a news release also said its proposal offers MoneyGram shareholders “a clear and significantly more certain path to faster closing.” The offer will not need review by the Committee on Foreign Investment in the United States, and has no closing conditions regarding change of control consents affecting MoneyGram’s money-transmitter licenses, Euronet said.

Euronet’s bid includes $15.20 in cash for each share of MoneyGram common stock and preferred stock on an as-converted basis, which Euronet said values MoneyGram, the No. 2 U.S.-based wire-transfer provider behind The Western Union Co., at $1 billion. In addition, Euronet said it plans to assume $940 million in MoneyGram debt.

Spokespersons for MoneyGram and Ant Financial did not respond to requests for comment from Digital Transactions News by late Tuesday morning.

MoneyGram’s stock soared Tuesday morning, trading on the Nasdaq Stock Market in the $15.80 range, or about 25% above Monday’s close. Euronet shares, at $83.79, were up 1% in Nasdaq trading.

Ant Financial owns the Alipay online payments and mobile-wallet service. The company had a carefully crafted buyout plan worked out with MoneyGram’s board and top executives that would have kept the MoneyGram name and left its chief executive, Alex Holmes, in place. The combination with Ant Financial was expected to give MoneyGram access to 630 million new accounts in the Asia-Pacific sector, including 450 million users of Alipay and another 180 million customers of Paytm, a mobile-payment provider in India with which Ant Financial has a partnership agreement.

In return, Alipay would have been able to broaden its presence in the U.S., particularly for users who travel to the U.S. The American market generates more remittance volume than any other country, with $53.6 billion in outflow annually, according to World Bank figures released in 2015.

Ria, which Euronet acquired in 2007, had $802 million in pro-forma revenue in 2016, up 17% from 2015. MoneyGram hasn’t yet released its fourth-quarter 2016 results, but for the year’s first nine months posted revenues of $1.13 billion.

Euronet said it and MoneyGram have “highly complementary distribution channels” that will position a combined company to grow in a fragmented market that the World Bank expects to grow by 4% annually in the next two years.

“MoneyGram’s focus on large retailers and national post offices combined with Euronet’s focus on independent agents and its broad set of consumer payment solutions will create a leading value proposition for customers worldwide,” Euronet’s release says. “Furthermore, Euronet believes the companies’ combined core strengths will accelerate their respective digital platform growth initiatives.”

Both companies have deals to serve customers of Wal-Mart Stores Inc.