Last night after the closing bell, it was announced that following the inability to gain the required approval for a previously announced merger transaction from the Committee on Foreign Investment in the United States (CFIUS), MoneyGram (MGI 12.01, -1.30 -9.8%) and Alibaba’s (BABA 182.89, -0.76 -0.4%) Ant Financial had agreed to terminate their talks.
In a deal which began to take shape a long 12-months ago in January of 2017, MGI agreed to be acquired by BABA’s Ant Financial for $13.25 per share, or about $880 million. As announced at the time of the initial deal, the merger was approved by the MGI Board of Directors but the tie-up was by no means a done deal.
Chief among the outside pressure, an offer was made on March 14, 2017 by peer Euronet Worldwide (EEFT 90.02, +4.86 +5.7%) to purchase MGI for $15.20 per share, outdoing $13.25/share Ant Financial offer. The following day, Ant Financial issued a statement championing its offer and holding firm on the expected closing date in the second half of 2017.
Then, a few days later on March 20, 2017 after announcing earnings MGI commented on the EEFT proposal, stating it would constitute a “superior proposal”. A week after that statement, MGI and EEFT inked the $15.20 per share bid – but the EEFT/MGI talk was short-lived as only a few days later, the Board of Directors announced it still held that Ant Financial deal would be the best for the company.
The heat was then back on when in mid-April MGI announced it had accepted a raised Ant Financial offer to be acquired for $18.00 per share.
News on the deal then quickly went quite until mid-May when MGI shareholders approved the $18.00 per share Ant offer, and stated that the deal was on track to close in the second half of 2017.
A deterrent to the Ant Financial deal, the location of MGI’s servers were up for discussion in the CFIUS review – it may be relevant to point out here that the regulating agency was tasked to look at the MGI/Ant deal three times in the past calendar year. Per a late-July press release where MGI management attempted to clear the air, the company stated that were the Ant deal to go through, its secure servers would continue to be located in the U. S.
Then in early December, MGI was the subject of a NY Post article which suggested that Ant Financial was not likely to convince regulators to approve the MGI deal as data theft by foreign countries was still among the officials’ chief concerns. This was even more of a public interest point due in large part to tax-filing service Equifax’s (EFX 119.99, +0.45 +0.4%) September 2017 data breach.
So, as the latest deadline for the MGI/Ant deal on December 6 came and went investors were left to wonder over the holiday break if the deal would come to fruition.
This all led to last night’s announcement that MGI and Ant had ended their merger agreement. Lows being made today in MGI touch lows from 12 months ago when the deal was announced.
The announcement also spurred on a statement from the forsaken EEFT in which the company detailed it believes there is a compelling commercial logic to an EEFT/MGI combination. However, EEFT noted that it has not conducted an evaluation of the MGI business in some time, and thus does not guarantee that any rekindling offer would be made.