Euronet-MoneyGram Talks Said to Progress Slowly on Data AccessBy
Longtime rivals still haggling over due diligence materials
Euronet aiming to scuttle sale to Jack Ma’s Ant Financial
Takeover talks between Euronet Worldwide Inc. and MoneyGram International Inc. are progressing slower than expected, according to people familiar with the matter, underscoring tensions between the longtime rivals as Euronet seeks to scuttle billionaire Jack Ma’s bid.
Euronet was hoping for a speedy deal. Yet more than a week after entering a non-disclosure agreement to discuss its offer, it still hasn’t gotten a full peek at MoneyGram’s non-public financial data, said the people, who asked not to be identified because the matter isn’t public.
The companies -- fierce competitors with a contentious history stretching back almost a decade -- are still negotiating over what information MoneyGram will make available in the so-called data room, the people said. Euronet needs to see the numbers to conduct due diligence on its $15.20-per-share offer. Talks remain friendly, and the parties expect to reach an agreement enabling Euronet to enter the data room sometime this week, they said.
When it announced its bid, Euronet stressed its familiarity with MoneyGram and willingness to execute a speedy deal with minimal vetting, stating in a letter to its board that it “would anticipate being in a position to execute the agreement within seven days following our receipt of our requested diligence materials.”
That raised expectations among investors and analysts that discussions would be further along by now.
“The market is waiting to see a resolution,” said Lawrence Berlin, an analyst and senior vice president with First Analysis Corp. who covers MoneyGram. “We were all expecting something but I think it takes time.”
“They know a lot about MoneyGram at this point,” he added. “We all hoped it would happen faster than it was going to happen. We just have to be patient.”
Ant Financial, which was spun out from the online retailing giant Alibaba Group Holding Ltd., agreed to buy Dallas-based MoneyGram in January for $880 million. The deal marked Ant Financial’s intention to expand in the U.S. by acquiring one of the country’s largest money transfer services providers. Euronet, based in Leawood, Kansas, trumped Ant’s bid with a higher offer on March 14, signing a non-disclosure agreement about two weeks later after MoneyGram determined that Euronet’s deal could be superior.
Progress has been slow because MoneyGram executives are concerned about sharing sensitive information with a direct competitor, the people familiar with the discussions said. MoneyGram is also worried about the antitrust scrutiny that a sale to Euronet would attract, making it especially cautious about what it is willing to share, one of the people said.
MoneyGram and its advisers have also been irked that Euronet asked Treasury Secretary Steven Mnuchin to nix its sale to Ant Financial on national security grounds, the people said. That line of argument suggests that MoneyGram’s customer data is particularly vulnerable to theft or misuse, they said.
Euronet is a direct competitor of MoneyGram and information sharing between the parties must take into consideration the risks associated with sharing competitively sensitive information, a representative for MoneyGram said in an emailed statement, adding that the board continues to recommend the merger with Ant Financial.
“MoneyGram and its advisers have had numerous discussions with Euronet and its advisers regarding the extensive amount of diligence materials requested, much of which is competitively sensitive,” Michelle Buckalew, MoneyGram’s corporate communications director, said in the statement.
“Information sharing between the parties has begun.”
Representatives for Ant Financial and Euronet declined to comment.
Euronet has long coveted MoneyGram, attempting a hostile takeover of the company about 10 years ago. Euronet expressed interest in acquiring MoneyGram again in November for $11.00 to $12.00 per share, before MoneyGram reached a deal with Ant, according to an updated proxy statement filed with the Securities and Exchange Commission on Tuesday.
In December, Euronet told MoneyGram’s advisers it was no longer interested in pursuing a deal due to MoneyGram’s surging stock price and “concerns related to financing a transaction,” the proxy states.
Euronet decided to jump Ant Financial’s bid last month because it didn’t expect MoneyGram to find a buyer, and was shocked when it announced its sale to Ant Financial, one person said. Euronet executives also view this as their last chance to buy the company, this person said.
For Euronet’s deal to move forward it needs to conduct due diligence then present a formal offer to MoneyGram’s board. If MoneyGram accepts that offer, according to the merger agreement, it then has to notify Ant Financial, which has four days to respond by matching the offer, raising it or walking away, among other options.
Ant is likely to consider countering with a higher offer should MoneyGram accept Euronet’s bid, a person familiar with the matter said last month.