Ant Financial Pays USD30 Million Penalty After US Nixes Its MoneyGram Buyout

Ant Financial Pays USD30 Million Penalty After US Nixes Its MoneyGram Buyout

Xu Wei

Date: Wed, 01/03/2018 - 22:32 / source:Yicai
Ant Financial Pays USD30 Million Penalty After US Nixes Its MoneyGram Buyout
Ant Financial Pays USD30 Million Penalty After US Nixes Its MoneyGram Buyout

(Yicai Global) Jan. 3 -- Ant Financial Services Group has had to drop its planned acquisition of the world’s second-largest remittance service provider MoneyGram International Inc. [NASDAQ:MGI] after the Committee on Foreign Investment in the United States (CFIUS) refused to clear the deal, Chinese media reported.

MoneyGram and Ant Financial have terminated the transaction, but plan to work together on new strategic businesses in the remittance and electronic payment markets and capitalize on their respective advantages to provide customers around the world with rapid-response and low-cost money transfer services.

"The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago. Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger,” said Alex Holmes,  MoneyGram's chief executive.

Ant Financial paid a USD30 million termination fee to MoneyGram when the deal fizzled. The Chinese company activated its plan to take over MoneyGram a year ago. As part of its globalization drive, Ant Financial struck a USD880 million agreement with MoneyGram on Jan. 26 to pay USD13.25 per share for the latter's equity. MoneyGram was to operate as an independent unit of Ant Financial after the deal, retaining its brands and teams, per the contract.

However, Euronet Worldwide Inc. [NASDAQ:EEFT] -- also a remittance firm -- tendered a USD1 billion bid for MoneyGram on March 14, offering USD15.20 a share, 15 percent higher than Ant Financial’s initial offer. Euronet claimed its acquisition would not need CFIUS’ clearance and would afford MoneyGram’s shareholders a clearer and more definite path to a fast closing.

Ant Financial upped its ante for MoneyGram stocks to USD18 apiece a month later, up 36 percent from its starting bid, an offer MoneyGram’s board unanimously approved. However, CFIUS, an agency under the US Treasury Department, ultimately rejected Ant Financial's acquisition.

Founded in 1940 and headquartered in Dallas, MoneyGram is the world’s second-biggest money transfer company after Western Union Co. [NYSE:WU], connecting 2.4 billion accounts worldwide. MoneyGram has worked with Chinese banks including Industrial and Commercial Bank of China Ltd. [SHA:601398] and Bank of China Ltd. [SHA:601988] to offer quick global money-wire services to individuals. Consumers may wire money abroad via MoneyGram’s global networks at the designated outlets of the above Chinese lenders.

Ant Financial is owned by Jack Ma, founder of tech titan Alibaba Group Holding Ltd. [NYSE:BABA].

 

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Keywords: MSCI, MoneyGram, Alibaba, Ant Financial Services