Moneygram International Inc (NASDAQ:MGI) has announced that Euronet Worldwide, Inc. (NASDAQ:EEFT) has indicated interest in acquiring it. The Board of Directors will consequently consider and review the proposal with the assistance of both financial and legal advisors in order to make a decision that suits the shareholders and the company best.
Earlier in the year, MoneyGram had disclosed that a definitive agreement had been entered into with Ant Financial with a view to pursuing a merger. That still remains the case as the Board of MoneyGram is still in favour of a merger with Alibaba Group Holding Ltd (NYSE:BABA).
“MoneyGram remains subject to the terms of the definitive merger agreement with Ant Financial and MoneyGram’s board has not changed its recommendation in support of the merger agreement with Ant Financial,” MoneyGram said in a press release.
Less scrutiny
To bolster its case Euronet Worldwide has made the argument that there would be less regulatory scrutiny for its bid compared to the one by Ant Financial since both companies are American. This is because clearance from the CFIUS – Committee on Foreign Investment in the United States.
A deal with Ant Financial would, however, need clearances from the CFIUS since its parent company is Chinese. In the past, the CFIUS has blocked a couple of deals by the Chinese in the U.S. And only a few days ago, a letter was sent to the U.S. Treasury Secretary by 20 organisations seeking to have the Ant Financial deal annulled.
Worldwide presence
With MoneyGram being a major player in enabling global remittances, Euronet is eyeing the proposed acquisition strategically since it would place it in a better position to fight off competition from technology startups which are disrupting the money transfer industry. Euronet counts four businesses engaged in money transfer in its portfolio and these include XE, HiFX, IME and Ria.
One difference between MoneyGram and Euronet is that the latter operates mostly through national post offices and large retailers while the former concentrates on independent agents. Currently, MoneyGram has outlets numbering around 350,000 in banks, post offices and retail shops in about 200 territories and countries.
On Tuesday shares of MoneyGram International Inc shot up by 24.57% to close the day at $15.77.
