(March 14): US electronics payments processor Euronet Worldwide Inc offered to buy US money-transfer company MoneyGram International Inc for more than US$1 billion, trumping a bid by Ant Financial Services Group, the payment affiliate of China's Alibaba Group Holding Ltd.
Euronet, which has made more than 35 acquisitions, has four money transfer businesses, including Ria, IME, HiFX and XE. Euronet focuses more on independent agents, while MoneyGram focuses on large retailers and national post offices, Euronet said.
Euronet's offer, unlike the one from Ant Financial, would not need to be reviewed by the Committee on Foreign Investment in the United States (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 Unites States.
Leawood, Kansas-based Euronet offered US$15.20 for each MoneyGram common share and preferred stock, on an as-converted basis. It said it would also assume about US$940 million of MoneyGram's outstanding debt.
Ant Financial had on Jan 26 said it would acquire Dallas-based MoneyGram for US$13.25 per share, or about US$880 million in total.
MoneyGram's shares surged about 27% in premarket trading to US$16.10, going above Euronet's offer, indicating investors were expecting a higher offer. Euronet's shares were down 2.7% at US$80.75.
The combination of Euronet and MoneyGram offered stockholders a clear path to closing," Euronet Chief Executive Michael Brown said in a letter to MoneyGram's board.
"We view (this) as a significant benefit in comparison to your current agreement with Ant Financial that contains conditions that make closing highly uncertain," Brown said.
MoneyGram and Ant Financial were not immediately available for comment.
For Ant Financial, the world's largest financial technology company, acquiring MoneyGram would help it expand outside China where it faces competition from Tencent Holdings Ltd's Wechat payment system.
MoneyGram, alongside competitor Western Union Co, has long dominated the 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.
The company faced a serious liquidity crunch in 2008 after investing in subprime and other risky asset-backed securities, but it was rescued through a US$1.5 billion equity and debt deal clinched with Goldman Sachs Group Inc and Thomas H. Lee Partners.
Euronet is being advised by Wells Fargo Securities LLC and legal firm Gibson, Dunn & Crutcher LLP.