Ant vs Euronet

The Patriot Act

Amid posturing on U.S. jobs, there are questions on the ownership of one of the bidders.
At Closing, April 20st
179.11 USD
At Closing, April 20st
76.78 USD

What should have been a straightforward deal among international payments providers has descended into a bun fight over which foreign-born company is better for the U.S.

In an open letter Thursday, Ant Financial Services Group told "the MoneyGram community" that through its $13.25-per-share bid, it wants to "create even more career growth opportunities for MoneyGram employees in the U.S. and around the world."


Euronet's latest proposal is 27 percent higher than the figure the company walked away from in December

Source: MoneyGram SEC filing dated April 5, 2017; company statements

The Alibaba Group Holding Ltd. affiliate offered its takeover of EyeVerify Inc., a Kansas City-based biometrics provider, as evidence of its track record of investing in takeover targets and boosting employee numbers. I've written before that an Ant purchase of MoneyGram aligns more closely with President Donald Trump's job-creation vision than might seem to be the case.

This pledge comes after Euronet Worldwide Inc., the rival bidder, told U.S. Treasury Secretary Steve Mnuchin that a purchase by China-based Ant would raise national security risks.

Euronet waving the American flag is part of the Hungarian-born company's suddenly rekindled interest in purchasing MoneyGram at $15.20 a share. It failed in a hostile takeover a decade ago, then walked away from talks when the stock rose above the $11 to $12 range it was willing to offer back in December. Two members of Congress, Kevin Yoder and Eddie Bernice Johnson, joined the fray by echoing those security concerns in their own letter to Mnuchin.

High Hopes

A possible bidding war has spurred MoneyGram's stock, while Euronet has benefited from the prospect of merging with a rival. Ant Financial is unlisted

Source: Bloomberg

With these statements, both parties have moved the conversation beyond price and into the realm of politics, patriotism and jobs. And Euronet has successfully put Ant Financial on the back foot.

A simple regulatory issue has turned into a lobbying effort, one that raises another concern: The identity of MoneyGram's would-be acquirer. In the original press release, the names Matrix Acquisition Corp. and Jack Ma don't appear.

Yet, according to a subsequent SEC filing, an Ant affiliate -- Alipay (Hong Kong) Holding Ltd. -- is the sole owner of a U.K. unit that in turn is the sole shareholder in Delaware-based Matrix, which is making the purchase. That Hong Kong company, whose exact nature isn't clear, is the guarantor for the deal and a subsidiary of Ant Financial, according to the filing. 

Assuming it's wholly owned by Ant -- the filing does not say this is the case -- then the entity buying MoneyGram would be Jack Ma, Alibaba's chairman and founder.

That's because, as Alibaba makes clear, Ant Financial Small & Micro Services Group Co. (its full name) is not a subsidiary of Alibaba. It is 76 percent-owned by Hangzhou Junhan Equity Investment Partnership and Hangzhou Junao Equity Investment Partnership, and 24 percent held by "third-party institutional investors and affiliated investment funds," according to a response Friday from Ant's PR agency. The agency was unable to provide a list of board members for Ant or Matrix. The two investment partnerships are owned by Ma.

While I have argued before that the deal shouldn't raise the hackles of the Committee on Foreign Investment in the United States, that doesn't mean it won't. Mnuchin, whose Treasury Department chairs CFIUS, has already been put on notice by members of Congress to conduct a "full and thorough" investigation of the deal. This means we can expect lawmakers to continue their pushback, especially given the murky nature of the ownership and the lack of transparency over who's making the purchase.

It also means that Jack Ma will need to work harder to make something of his Trump handshake and a pledge to create U.S. jobs, if he wants to remain part of this patriot act.

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

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    Tim Culpan in Taipei at

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