Ant Financial Acquires MoneyGram at Discount Price

by Tim Sloane 0

This article in Bloomberg Gadfly has several tongue in cheek comments regarding the acquisition of MoneyGram by Ant, a Chinese company, during the Make America Great Again reign of Trump:

“MoneyGram International Inc. — inadvertently one of the earliest targets of Donald Trump’s nationalistic pronouncements on the campaign trail last year — is now selling itself to a Chinese company. Let that sink in for a moment.The deal will strengthen MoneyGram, a money-transfer service, at a time when a chunk of its business is expected to come under pressure due to President Trump’s stance on Mexico with respect to both trade and immigration. Mexico represents 10 percent of all transactions for MoneyGram, according to Bloomberg Intelligence.

The acquirer is Ant Financial, an affiliate of Alibaba Group Holding Ltd., the Chinese tech giant founded by billionaire Jack Ma. Under Ant’s ownership, MoneyGram can probably expand further and faster internationally — or into more “corridors,” to use industry parlance — where it faces stiff competition from larger rival Western Union Co. The deal will also help Ant’s Alipay electronic payments system expand in the U.S.

The strategic logic is plain. But as for the price, it has to be a tad disappointing for MoneyGram’s shareholders. Ant Financial is offering $13.25 a share in cash for the Dallas-based company, which is only 9 percent higher than the stock’s average closing price for the past 20 trading sessions. These days, that’s a minuscule takeover premium, especially for a growing business. Analysts project a 6 percent jump in MoneyGram’s revenue this year, followed by an additional 5 percent increase in 2018 — a faster clip than Western Union.”

Trump has not yet figured out the impact of his tweets, but this article suggests that his tweets and policies may have helped Ant get a better deal.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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