New York - Ant Financial raised its agreed offer for MoneyGram International by 36 percent as the financial-services company controlled by Chinese billionaire Jack Ma tries to top a competing offer and overcome security concerns.
The revised bid was worth $18 (R240) a share in cash, up from a previous offer of $13.25, the companies said in a joint statement. The new deal, which had the backing of MoneyGram’s board, valued all the common and preferred stock at $1.2 billion, it said.
Euronet Worldwide last month offered $15.20 a share for the Dallas-based payments company.
By raising its bid by such a large amount, Ant Financial was making clear its intention of completing a deal, said Doug Feagin, Ant’s international president. But the Chinese company could still face potential political obstacles, with US legislators urging the powerful Committee on Foreign Investment in the US (CFIUS) to conduct a “full and thorough” review of the deal.
“You have two issues; what are MoneyGram shareholders going to receive? And that’s what Ant Financial is addressing with a revised bid,” said Kirk Boodry, an analyst at New Street Research. “Politics is the other issue that stands out here and Chinese companies have struggled to get deals done in the US.”
Euronet said its offer had a better chance at regulatory approval.
Read also: Little-known firm vies with Jack Ma for MoneyGram
The Leawood, Kansas-based company did not immediately respond to calls and emailed requests for comment outside normal business hours.
Shares of MoneyGram closed on Thursday at $16.51.
US President Donald Trump has taken a hard stance on China since assuming office, increasing the chance Ant Financial’s bid will be closely scrutinised by CFIUS, an inter-agency panel that examines acquisitions of companies by foreign investors.
The White House can stop the deal, and Treasury Secretary Steven Mnuchin is the chairman of the panel.
Ant Financial’s bid is a clear shot across the bow against Euronet, which directly raised security concerns with Mnuchin and has said doubts around approval were a key reason why MoneyGram shareholders should reject its Chinese rival’s offer.
Conviction
“We wanted to speak with conviction that this is something strategic for us,” Feagin told Bloomberg. “We intend to move to get closed and to be successful here.”
He added that while regulatory approval process had been “constructive” thus far, the company could not provide a specific time frame on when the deal would be closed. Some provisions, such as fees to be paid if the deal fell apart, had changed to match the increased value of the new offer.
MoneyGram chief executive efficer Alex Holmes said Euronet’s binding bid came in on Friday, allowing his board to consider it alongside Ant Financial’s improved offer.
“It made lot of sense to us at $13.25 and certainly it makes the same amount of sense, if not more now, for shareholders now at $18,” he said.
“If Euronet chooses to continue forward or make another offer it’s really entirely up to them.”