US electronic payments company Euronet Worldwide Inc launched a US$1 billion bid for rival MoneyGram International Inc on Tuesday, arguing that its all-American deal would face less regulatory scrutiny than a lower bid by China’s Ant Financial Services Group (螞蟻金服).
Ant Financial, the financial services affiliate of Alibaba Group Holding Ltd (阿里巴巴), said it remained committed to its deal.
“MoneyGram and Ant Financial continue to work cooperatively under the terms of our merger agreement, and together, we are making progress on schedule toward obtaining all required regulatory and shareholder approvals,” it said in a statement.
MoneyGram said it would “carefully review and consider” the proposal from Euronet.
“MoneyGram remains subject to the terms of the definitive merger agreement with Ant Financial and MoneyGram’s board has not changed its recommendation in support of the merger agreement with Ant Financial,” it said.
MoneyGram shares surged nearly 25 percent to close at US$15.77 on Tuesday, above Euronet’s cash offer of US$15.20 per share, indicating investors expect a higher bid to materialize.
Ant Financial in January said it would acquire Dallas-based MoneyGram for US$13.25 per share, or about US$880 million, in its first major move to expand its presence overseas.
MoneyGram is one of the biggest players in the global remittance market and a takeover would enable Kansas-based Euronet to better compete against digital start-ups which are transforming the money transfer business.
“Euronet is the No. 4 traditional offline global player via its Ria brand so it’s not a surprise they have tried to crash the party,” said Michael Kent, the chief executive officer of money transfer business Azimo. “Should be a major synergy play there.”
Euronet has four money transfer businesses, including Ria, IME, HiFX and XE. Euronet focuses more on independent agents, while MoneyGram targets large retailers and national post offices.
MoneyGram, alongside Western Union Co, has long dominated the global money transfer industry with its large network of retail locations. It has about 350,000 outlets in retail shops, post offices and banks in nearly 200 countries and territories.
A Euronet deal would not require clearance by the Committee on Foreign Investment in the US (CFIUS), a US inter-agency panel that reviews foreign acquisitions of domestic assets for national security concerns.
The CFIUS has been a stumbling block for several Chinese deals in the US and was considered a big hurdle for Ant Financial.
A Euronet deal is likely to be more agreeable to US policymakers against a backdrop of rising tensions between China and the US over trade and foreign policy.
On Friday last week, about 20 organizations sent a letter to US Secretary of the Treasury Steven Mnuchin, who chairs CFIUS, and other officials that warned against allowing Ant Financial to buy MoneyGram.
“There can be little doubt that if China is allowed to dominate the global payments market, it will use the information, technology, intelligence and economic power it obtains to the detriment of America’s economic and national security,” they wrote in the letter.
Ant dominates China’s online payment market, but has been ramping up investment overseas amid fierce rivalry at home with peers such as Tencent Holdings Ltd’s (騰訊) popular WeChat Pay(微信支付).
A MoneyGram acquisition would have boosted Ant’s international presence ahead of a future initial public offering, allowing it to deploy its technology in the large US payments market with a well-known brand.
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