A bidding war pitted Alibaba Group Holding Ltd (NYSE: BABA)'s financial arm, Ant Financial, against Euronet Worldwide, Inc. (NASDAQ:
EEFT) to acquire Moneygram International Inc (NASDAQ:
MGI).
MoneyGram, a global provider of money transfer services, initially fielded a $13.25 per share offer from Ant Financial. After a
fierce back-and-forth, Ant appears to have been declared victor in the bidding war after
offering $18 per share.
Euronet highlighted in a press release that Ant Financial is a China-based
company and elected officials have expressed concerned over a deal. In fact, M&A activity involving a Chinese acquirer and an
American company require the approval of the Committee on Foreign Investment.
Nevertheless, assuming a deal is finalized and approved, Euronet may consider looking elsewhere in the space for another company
to acquire.
Western Union And Global Payments A Hefty Price Tag
Given the fact that MoneyGram and Ant Financial agreed on a $1.3 billion deal, it may be safe to assume that the industry titan
The Western Union Company (NYSE: WU) isn't up for
grabs.
According to Google
Finance's data, Euronet ended 2016 with $809.72 billion in cash and short-term investments. While the cash-on-hand may be
enough to finance a good portion of an acquisition of MoneyGram, Western Union's current $9.55 billion valuation may be out of
reach — especially if a deal would occur at a similar 64 percent premium.
Similarly, Global Payments Inc (NYSE: GPN) boasts a
$12.09 billion valuation which also makes a deal likely out of reach for Euronet.
Qiwi
Qiwi PLC (NASDAQ: QIWI), a major player of payment
services in Russia and the Commonwealth of Independent States currently trades at a $1.05 billion.
Needless to say, political concerns might become top priority in any potential deal. Specifically, President Donald Trump said
U.S.–Russia relations have hit a "low point," so an acquisition of a Russian company by an American one may not play out well.
Also important to keep in mind is that the company's base revenue is the Russian rubble so the American company would have to
deal with any potential fluctuations in the currency when bringing cash back to the United States.
Euronet Doesn't Have To Be A Buyer
Needless to say, Euronet is under no obligation to shop for an acquisition after it failed to win MoneyGram. Needless to say,
this doesn't mean that there won't be any M&A activity in the space.
Western Union did shell out £606 million
($974.6 million at that time) to acquire Travelex Global Business in 2011, so the company hasn't shied away from flexing its
financial muscle.
Western Union may also feel the pressure to hunt for an acquisition after Global Payments' $4.3 billion acquisition of Heartland
Payment Systems closed in April of 2016 to
the approval
of some Wall Street analysts.
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Alibaba's Ma Really
Wants To Buy MoneyGram But Will It Be Approved?
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