Ant Financial Moves A Step Closer To Deal For MoneyGram
Ant Financial, the Chinese Financial Services conglomerate that is an affiliate company of Alibaba, the New York Stock Exchange member and Amazon rival, is currently in a race against US-based MoneyGram for the right to acquire American money transfer service MoneyGram.
Ant Financial, who recently raised funding round that valued the company at more than $60 billion, more than rival PayPal, originally bid $880 million in January for MoneyGram; an offer that MoneyGram senior management recommended to shareholders, before Euronet made an unsolicited rival bid reported to be worth $1 billion.
Euronet say that because they are a US company, their offer would not be subject to the same onerous regulatory hurdles as Ant Financial, and also argued that the Chinese Government’s 15% holding in Ant should count against them.
This view has been backed up by U.S. Congressmen Robert Pittenger and Chris Smith, reports Hartford Business; in a statement, the pair commented that:
“Should this transaction be approved, the Chinese government would gain significant access to, and information on, financial markets and specific international consumer money flow.”
MoneyGram remain open to Ant’s latest offer, however, saying that they have made “significant progress” toward obtaining the clearance they need from the US Authorities.
Jack Ma, the founder and CEO of Alibaba, may have an important role to play in whether the deal goes through.
Ma met with President Donal Trump in January, before Ant’s offer was made public, and senior Ant Executives have also stressed that the company will look to invest and hire in the US – something that Trump is likely to have demanded, given his desire to put ‘America First”.
“We plan to grow the U.S.-based team and create even greater opportunities for the MoneyGram community as we pursue our shared vision of global inclusive finance in an increasingly digital era,”
Commented Ant Financial’s International President Doug Feagin.
MoneyGram’s stock, which is traded on the NASDAQ, is up nearly 40% since the first bid was made, but still, at $16.51, trading lower than the offer price of $18 per share.
According to Tech Crunch, a group representing shareholders who own 46% of MoneyGram, have also given their consent to the deal.
MoneyGram was founded in Hungary in 1994 and its acquisition led growth strategy has turned the company into a global player.
Unlike the majority of Ant’s stable of companies, which include AliPay, and recent acquisitions Kakao Pay in Korea and Paytm in India, MoneyGram’s services cater to offline and in-store customers – however the company’s network of branches will allow Ant to increase its footprint in places such as the US, Mexico, China, India and the Philippines.
The Money Cloud View
It’s interesting to note that Ant Financial’s desire to acquire MoneyGram is based on its bricks, rather than its clicks. Although we are seeing a wide-scale migration towards the digitalisation of financial services, there is still a vast global network of brick and physical outlets for making cross border money transactions, which Ant are no doubt looking to hoover up.
It will be fascinating to see what approach, if the deal goes through, Ant will take, if any, towards pushing that customer base towards online services.