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Is MoneyGram (MGI) Open to Merger Talks with Euronet?
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After receiving a counter offer from Euronet Worldwide, Inc. (EEFT - Free Report) for being acquired, the board of directors of MoneyGram International Inc. stated that the proposal could be superior to the offer by Ant Financial Services Group in January. Notably, Ant Financial is an affiliate of China’s Alibaba Group Holding Limited (BABA - Free Report) .
Euronet has offered to buy MoneyGram shares for $15.20 a piece, which is way higher than Ant Financial’s bid of $13.25 per share.
It is also being said that MoneyGram has agreed to talk and share confidential data with Euronet, to help latter strengthen its bid.
On the other hand, MoneyGram also said that its board continues to recommend the Ant Financial offer. It added not making any recommendation with respect to the Euronet proposal.
Since the news of Ant Financial’s proposal, shares of MoneyGram have soared 27% compared with a gain of 1.6% for the Zacks categorized Finance-Miscellaneous Services industry.
MoneyGram has been eyed by Euronet since long. In fact, Euronet had bid for MoneyGram in way back in 2007. The move by Ant Financial prompted Euronet to give a last try to buy MoneyGram, before it becomes part of another company.
The partnership with either of the companies will add to the scope and scale of MoneyGram which operates in an intensively competitive and fast-changing payments industry. Also, MoneyGram witnessed a decline in total revenue in 2015 and 2014. On its own, the company has to continually invest in business to keep pace with the constantly evolving industry. Its union with a stable partner will make its journey easier.
The deal with Ant Financial will expand MoneyGram’s presence in China, a region where the former is a leading player, serving more than 450 million customers. It will also extend the company’s presence to 18 million Paytm users in India.
Euronet deal has higher odds of getting through. First, Euronet’s proposal is superior to Ant Financial’s. Second, the Euronet deal will see no hang ups from the regulatory body Committee On Foreign Investment in the United States (CFIUS) or no closing condition related to securing change of control consents covering money transmitter licenses in the jurisdictions in which MoneyGram operates.
On the other hand, the Ant Financial deal will demand significant scrutiny from CFIUS given the huge Chinese investment required in a U.S. financial services firm. Donald Trump’s “America First” platform has prompted an increasing number of U.S. politicians to call for tougher measures to keep Chinese buyers away from domestic business.
Moreover, the business of Euronet and MoneyGram complement each other. While Euronet’s main focus is smaller, independent agents, MoneyGram partners with several large chains. Both companies have an impressive share in the money transfer market next only to the industry leader Western Union Co. (WU - Free Report) . Together they can pose stiff competition to Western Union, which commands a premium pricing in many corridors due to its established and globally recognized brand name.
Moreover, the money remittance market remains significantly underpenetrated. The combined company will be able to garner a much bigger pie of the booming industry. Also, they will be able to significantly expand their digital platform.
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Is MoneyGram (MGI) Open to Merger Talks with Euronet?
After receiving a counter offer from Euronet Worldwide, Inc. (EEFT - Free Report) for being acquired, the board of directors of MoneyGram International Inc. stated that the proposal could be superior to the offer by Ant Financial Services Group in January. Notably, Ant Financial is an affiliate of China’s Alibaba Group Holding Limited (BABA - Free Report) .
Euronet has offered to buy MoneyGram shares for $15.20 a piece, which is way higher than Ant Financial’s bid of $13.25 per share.
It is also being said that MoneyGram has agreed to talk and share confidential data with Euronet, to help latter strengthen its bid.
On the other hand, MoneyGram also said that its board continues to recommend the Ant Financial offer. It added not making any recommendation with respect to the Euronet proposal.
Since the news of Ant Financial’s proposal, shares of MoneyGram have soared 27% compared with a gain of 1.6% for the Zacks categorized Finance-Miscellaneous Services industry.
MoneyGram has been eyed by Euronet since long. In fact, Euronet had bid for MoneyGram in way back in 2007. The move by Ant Financial prompted Euronet to give a last try to buy MoneyGram, before it becomes part of another company.
The partnership with either of the companies will add to the scope and scale of MoneyGram which operates in an intensively competitive and fast-changing payments industry. Also, MoneyGram witnessed a decline in total revenue in 2015 and 2014. On its own, the company has to continually invest in business to keep pace with the constantly evolving industry. Its union with a stable partner will make its journey easier.
The deal with Ant Financial will expand MoneyGram’s presence in China, a region where the former is a leading player, serving more than 450 million customers. It will also extend the company’s presence to 18 million Paytm users in India.
Euronet deal has higher odds of getting through. First, Euronet’s proposal is superior to Ant Financial’s. Second, the Euronet deal will see no hang ups from the regulatory body Committee On Foreign Investment in the United States (CFIUS) or no closing condition related to securing change of control consents covering money transmitter licenses in the jurisdictions in which MoneyGram operates.
On the other hand, the Ant Financial deal will demand significant scrutiny from CFIUS given the huge Chinese investment required in a U.S. financial services firm. Donald Trump’s “America First” platform has prompted an increasing number of U.S. politicians to call for tougher measures to keep Chinese buyers away from domestic business.
Moreover, the business of Euronet and MoneyGram complement each other. While Euronet’s main focus is smaller, independent agents, MoneyGram partners with several large chains. Both companies have an impressive share in the money transfer market next only to the industry leader Western Union Co. (WU - Free Report) . Together they can pose stiff competition to Western Union, which commands a premium pricing in many corridors due to its established and globally recognized brand name.
Moreover, the money remittance market remains significantly underpenetrated. The combined company will be able to garner a much bigger pie of the booming industry. Also, they will be able to significantly expand their digital platform.
MoneyGram carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think. See This Ticker Free >>