March 14, 2017 / 4:52 PM / 8 months ago

Jack Ma's Ant march may be worth slowing

NEW YORK (Reuters Breakingviews) - Ant Financial’s march may be worth slowing down. A $1 billion offer for MoneyGram from Euronet Worldwide improves on the deal it agreed earlier this year with the payments arm of Jack Ma’s e-commerce colossus Alibaba. The interloper is in the rare position of having a couple of important advantages over the deep-pocketed Chinese entrepreneur.

A Moneygram logo is seen outside a bank in Vienna, Austria, June 28, 2016. REUTERS/Heinz-Peter Bader

Euronet’s offer is 15 percent higher than Ant’s proposal. It’s also 38 percent more than the three-month volume-weighted average of MoneyGram’s stock price before it disclosed the sale plan.

Unlike Ant, $4.4 billion Euronet can lop off some costs. It estimates them at about $60 million within two years. Once taxed, discounted and capitalized, they’re worth some $380 million today. That gives Chief Executive Michael Brown another $100 million or so of firepower before any purely financial argument for the deal starts looking like a stretch.

Moreover, Euronet ought to have an easier regulatory path to closing a deal with 77-year-old MoneyGram. Because of the sensitive nature of moving money across borders, China-based Ant could face a review from the Committee on Foreign Investment in the United States. That opaque process can be long and tedious. Its deal rejections sometimes surprise would-be merger partners.

The rival bid puts Ma in an awkward spot. He wants Ant to get a toehold in the United States and Dallas-based MoneyGram presents a manageable way to do so. Larger rival Western Union probably would cost at least $12 billion, assuming a 20 percent premium. Ant, which recently arranged to borrow $3 billion, may not have the firepower, especially with the Chinese government making it harder to get money out of the country.

Leaving empty-handed isn’t exactly Ma’s style. Ant, however, is planning a much-awaited initial public offering. That would give it additional currency to strike deals. Potential new investors might even admire the patience and financial discipline.


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