[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / March 15, 2017 / Active Wall St. blog coverage looks at the headline from electronic payments Company Euronet Worldwide, Inc. (NASDAQ: EEFT) and MoneyGram International, Inc. (NYSE: MGI). Euronet Worldwide disclosed on March 14, 2017, that it made a proposal to acquire MoneyGram International in a cash plus debt transaction. MoneyGram has confirmed the receipt of the proposal and has said that it would consult its legal and financial advisors and review its options before taking a final decision. Register with us now for your free membership and blog access at:
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Highlights of Euronet's proposal
Euronet has offered to pay $15.20 for MoneyGram's common and preferred shares on an as-converted basis. Euronet's offer puts MoneyGram's value at over $1 billion. In addition, Euronet has also offered to takeover MoneyGram's existing debt of over $940 million.
The businesses of Euronet and MoneyGram are highly complementary. The proposed Euronet–MoneyGram merger will lead to the formation of a leading global financial transactions Company that is well positioned to serve the customers in US and in locations across the world.
Euronet's proposal envisions cost synergies of approximately $60 million from the second year of the closing the deal.
Euronet's proposal is approximately $130 million and 15% higher than the Ant Financial Group's offer for MoneyGram. Euronet's offer is at a 28% premium of MoneyGram's share price of $11.88, on the day before the MoneyGram-Ant Financial agreement was announced on January 26, 2017. MoneyGram's shareholders can be confident about the closing of the transaction as it would not be scrutinized by the Committee on Foreign Investment, United States (CFIUS) nor will there be any problem with regards to the money transmitter licenses for MoneyGram's areas of operations.
Euronet's arguments in favour of its proposal
Euronet believes that the proposed merger with MoneyGram will be beneficial to all stakeholders including, shareholders, customers, agents, and employees.
According to a projection by the World Bank the global money transfer industry is expected to grow at 4% annually for the next two years. As both MoneyGram and Euronet have complementary business, the merger will allow them to make the most of the opportunities in the sector. By bringing together MoneyGram's network of large retailers and national post offices and Euronet's distribution network of independent agents as well as its bouquet of consumer payment solutions will be attractive to and beneficial for its customers. The combination will also help in implementing technically advanced initiatives for the digital platforms.
Both Companies have a leadership team of experienced and talented professionals which when brought together can drive the combined business to new heights. Euronet has vast experience in mergers and integration of the merged Companies. Euronet has till date made over 35 acquisitions and integrated four money transfer businesses, Ria, IME, HiFX and XE.
Both Euronet and MoneyGram are highly committed to Compliance and Euronet's compliance track record since its inception in 1994 will only boost the confidence of customers across the globe and assure regulators.
Suffice to say Euronet's believes its proposal is a better value proposition for MoneyGram.
Agreement with Ant Financial Group
In January 2017, Ant Financial Services Group, the parent Company of Alipay, announced the acquisition of MoneyGram by purchasing all its outstanding common and preferred shares. Under the agreement, Ant Financial offered to pay MoneyGram's shareholders $13.25 per share in cash taking the transaction value to approximately $880 million. Ant Financial is the financial services arm controlled by ecommerce giant Alibaba's Jack Ma. The deal has been approved by MoneyGram's Board as well as its majority shareholder, Thomas H. Lee Partners, and is expected to close in H2 2017, subject to closing conditions.
Post the merger, MoneyGram will continue to be headquartered in Dallas, Texas and function under its own brand and retain its top management team. MoneyGram's Alex Holmes is expected to continue as CEO of the merged Company. The transaction will help MoneyGram reach out to Ant Financial's global network of 630 million users (450 million Alipay users + India's 180 million Paytm users.) Ant Financial will gain access to MoneyGram's network of 2.4 billion bank and mobile accounts and 350,000 physical locations. The transaction would fulfill Ant Financial's mission of providing inclusive financial services to users around the world, especially in major economies such as the US, China, India, Mexico, and the Philippines.
The start of a bidding war for MoneyGram
Euronet's unsolicited proposal to MoneyGram when MoneyGram has already signed an agreement with Ant Financial is sure to heat up the current situation. Interestingly, this is not the first time that Euronet has bid to acquire MoneyGram. Euronet had unsuccessfully tried to acquire MoneyGram in 2013 as well as in 2008. Till such time that MoneyGram makes a final decision on Euronet's proposal, one can only speculate regarding the winner.
Stock Performance
At the close of trading session on Tuesday, March 14, 2017, Euronet Worldwide's share price finished yesterday's trading session at $83.22, marginally up by 0.31%. A total volume of 502.22 thousand shares exchanged hands, which was higher than the 3 months average volume of 338.94 thousand shares. The stock has rallied 11.93% and 18.46% in the last three months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have surged 14.90%. The stock is trading at a PE ratio of 25.68 and currently has a market cap of $4.35 billion.
At the closing bell, on Tuesday, MoneyGram's stock surged 24.57%, ending the trading session at $15.77. A total volume of 10.31 million shares were traded at the end of the day, which was higher than the 3-month average volume of 618.39 thousand shares. In the last six months and previous twelve months, shares of the Company have soared 121.18% and 148.74%, respectively. Moreover, the stock gained 33.53% since the start of the year. At Tuesday's closing price, the stock's net capitalization stands at $836.44 million.
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