Ant Financial, based in China, has increased its bid to takeover MoneyGram International by more than a third, beating the offer of its U.S. rival to gain approval from the U.S. based electronic payment company’s board, although it will face hurdles with regulators.
Ant is planning to expand globally with this acquisition of one of the world’s largest companies in remittances, but hit a big road block in March when Euronet Worldwide based in the U.S. made an offer and lobbied openly lawmakers in the U.S. saying the proposal by Ant created a security risk for the country.
Ant is the finance affiliate of Alibaba Group Holding the e-commerce giant and increased its bid by 36% to a cash price of $18 per share which valued MoneyGram at approximately $1.2 billion.
The latest offer easily beats that of Euronet, which bid $15.20 per share and represents a premium of 9% to the last traded share price of MoneyGram on Thursday. No comment was made by Euronet regarding the latest bid by Ant.
The global remittance channels of MoneyGram for transferring money overseas could help Ant to build a network that is cross border after a number of investments it made recently across Asia.
However, the deal needs to clear the U.S. Committee on Foreign Investment or CFIUS, which examines acquisitions to see if they have any risks of national security.
CFIUS has become a road block for several deals involving Chinese firms in the U.S. A deal that involved U.S. based Euronet would likely be much more agreeable to policymakers in the U.S. amidst the increased tensions between Beijing and Washington over foreign policy and trade.
Euronet said that ownership by the Chinese might compromise the relationship between MoneyGram and law enforcement when there is investigations related to money laundering and financing related to terrorism.
Ant has sought to assuage those worries by reiterating Monday that any data it collected on users on the MoneyGram system in the U.S. would continue to remain in the U.S. on servers based there and that MoneyGram would continue to operate as an independent entity.
Ant in a prepared joint statement with MoneyGram said they made progress towards the obtaining of approvals from regulators, including winning antitrust clearance in the U.S. and are confident that this deal will close during 2017.
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