Ant Financial, an affiliate company of Alibaba, has been in a bidding war to acquire U.S.-based MoneyGram for a long time now. Now the Chinese company has increased its bid, making it more lucrative than what was offered by Euronet.

MoneyGram
By Ged Carroll from Hong Kong mostly, HKSAR (MoneyGram neon sign) [CC BY 2.0], via Wikimedia Commons

Beating the offer by rival Euronet

Ant Financial increased its bid for the cross-border payment service by over a third, superseding its rival’s offer to win approval from the U.S. electronic payment firm’s board. However, the company still faces several regulatory obstacles.

The Chinese company made a bid of $880 million or $13.25 per share in January, but now, it has increased its offer to $18 per share. Ant’s new offer easily beats the $15.20 per share or $1 billion bid proposed by Euronet. The new offer represents a 9% premium over MoneyGram’s last traded share price, notes Reuters.

The Chinese firm’s new offer represents a 64% premium to MoneyGram’s average share price. The new offer has been approved unanimously by MoneyGram’s board. A group of investors owning 46% of the voting rights have given their nod as well, notes TechCrunch.

Why Ant Financial wants to acquire MoneyGram

Ant Financial has been planning to gain a global foothold with the acquisition of MoneyGram, but last month, those plans hit a roadblock when U.S.-based Euronet Worldwide Inc. made an unsolicited offer and openly lobbied U.S. lawmakers, saying that Ant Financial’s proposal poses a national security risk, notes Reuters.

MoneyGram’s global remittance channels for sending money to different parts of the world would assist the Chinese company in building a cross-border network following its multiple investments in Asia. This deal follows the Chinese company’s recent investments in payments firms in South Korea, the Philippines, Thailand and India, notes Reuters.

MonayGram “will add valuable cross-border remittance capabilities to the Ant Financial ecosystem, serving our more than 630 million users globally…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,” said Ant Financial International President Doug Feagin.

The deal still faces regulatory risks

Still, it cannot be ignored that a deal with Euronet would be more agreeable to U.S. policymakers amid the increasing tensions between Beijing and Washington over trade and foreign policy. The deal needs to clear the Committee on Foreign Investment (CFIUS) before anything else. The CFIUS checks if the acquisition poses any national security risk.

Jeffrey Sun, a Shanghai-based partner with law firm Orrick, Herrington & Sutcliffe, told Reuters, “CFIUS may lengthen the process…I don’t think CFIUS would be a deal killer.”

In a joint statement, MoneyGram and Ant said that they have made progress in obtaining the necessary regulatory approvals, including gaining U.S. antitrust clearance. Further, the companies said that they are confident about the deal closing this year.