Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

MoneyGram International Inc.'s final sale price isn't a question of how high Ant Financial is willing to go, but rather the ceiling Euronet Worldwide Inc. has for a bid.

That's because Jack Ma really must jump back in.

As Bloomberg's Selina Wang reported, Ant is likely to either counter with a higher offer, or wait until Euronet completes due diligence and then make a formal bid. In January, Ant announced plans to acquire the Dallas-based payment services provider for $13.25 a share cash, pending regulatory approval. Euronet came in with a $15.20 a share tilt last week, and MGI's board said Monday the offer "could reasonably be expected to result in a 'company superior proposal'."

Money Monster
MoneyGram's shares were performing solidly even before Ant Financial made a bid
Source: Bloomberg

Ma, who controls both Alibaba Group Holding Ltd. and its financial-services affiliate, can blame himself (or his advisers) for Euronet cutting in on his waltz.

While both Ant Financial and MGI's board thought theirs was a match made in heaven, the low-ball offer made by Zhejiang Ant Small & Micro Financial Services Group Co. -- Ant's formal name -- at the start of the year virtually begged someone to make a counter bid.

Unfazed
Investors didn't blink when MoneyGram said Euronet's bid may be considered superior to Ant's offer
Source: Bloomberg
Intraday times are displayed in ET.

There are only two solid reasons for Ma to ditch the deal and move on, and more than a few for him to continue the fight. In favor of cut and run are the issues of cost and regulation.

Frankly, price would be a poor excuse for Ma to walk away. Ant could offer 15 percent over Euronet's bid and still be paying 47 percent more than MoneyGram's closing share price prior to Ant's first-round offer. That sounds like a lot, but it merely values the company in line with the average of consumer finance peers on a price-earnings basis.

It's All Relative
Even amid a bidding war, MoneyGram's valuation doesn't look stretched
Source: Bloomberg
Note: Average and median are for 11 industry peers, including Western Union.

Then there's CFIUS. Euronet used the term -- an abbreviation for the Committee on Foreign Investment in the U.S. -- at least seven times in its press release announcing the bid. Beyond offering a higher price (not an insignificant justification), Euronet's entire strategy seems tied to playing the patriot card of "We're American, they're Chinese."

Even in Trump's America, a Chinese company purchasing MoneyGram shouldn't raise the hackles of CFIUS because there's little argument the deal would be a national security risk.

Given that Ma fronted up to Trump Tower and offered to create 1 million American jobs, it's just as probable a Trump White House will wave the transaction through.

Which brings us to the reasons to continue the fight. Walking away now would not only be a defeat for a man trying to make his mark in America, but would also be a severe loss of face in the U.S., and back home.

There's also the issue of commitment. If Ma gives up that easily, it's going to be hard for other boards to take him seriously the next time he wants to do a deal. U.S. firms are already skeptical of Chinese companies' M&A ambitions, and such a back down would give those detractors louder voice.

Finally, there's the issue of precedent, and China's bigger-picture plans in America. If the mere whiff of CFIUS is enough to scare away a relatively mundane offer, then there's every chance bolder Chinese acquirers may decide to sit on the sidelines. It may also embolden competitors to wave the CFIUS flag any time a deal threatens their position.

In the end, Ma has to keep fighting for MoneyGram. It's his patriotic duty.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net