Euronet, an industry peer of MoneyGram based in Leawood, Kansas, announced on Tuesday that it had bid $15.20 per share for MoneyGram. The bid represents a 15% premium over MoneyGram's existing $13.25 per share agreement with Ant Financial, a financial offshoot of Alibaba (BABA) - Get Report
"Combined with MoneyGram, Euronet would become one of the largest global money transfer players, allowing it to better compete against money transfer giant... Western Union (WU) - Get Report with 500,000 agent locations, in our view," wrote Evercore ISI's Rayna Kumar Tuesday. "We believe the EEFT-MGI acquisition will pressure WU's cross-border pricing. While some agent locations may be redundant, currently, EEFT has 317,000 agent locations and MoneyGram 357,000."
MoneyGram's closed up about 25% Tuesday to $15.77, signifying shareholders may be anticipating a superior bid from Hangzhou, China-based Ant, which agreed to acquire MoneyGram on Jan. 26.
"When we saw the Ant Financial bid we saw this as our last and final opportunity to really have a once-in-a-lifetime advantage. So we decided now is the time to jump in," said Mike Brown, CEO and president of Euronet in a conference call to discuss the bid with analysts this morning.
Brown also attributed the timing of the bid to Euronet's significant growth rate over the last four or five years as well improved financial situation of the company, which would allow Euronet to pay down the debt on this acquisition very quickly, according to Brown.
Evercore reiterated its "Outperform" rating on Euronet, which remains one of Evercore's top ideas in its Payments, Processors, & IT Services coverage. The analysts added that head winds still remain as Western Union's pricing remains at a 20% premium to competitors.
Euronet's $1 billion offer is cash and also includes a promise to take on $940 million in MoneyGram debt, as does Ant's agreement. It comes after Euronet tried and failed to acquire MoneyGram in 2007 for $1.65 billion, or $20 per share, in stock.
Euronet's unsolicited $954.7 million bid for MoneyGram, which is run by CEO Alexander Holmes, represents a premium of 28% over the closing price of $11.88 for MoneyGram stock on the final day of trading prior to the transaction announcement on Jan. 26.
The offer presents "a clearer and significantly more certain path to a faster closing with no required review by the Committee on Foreign Investment in the United States ("CFIUS") and no closing condition related to securing change of control consents covering money transmitter licenses in the jurisdictions in which MoneyGram operates," said Euronet Chief Executive Michael Brown in a letter to MoneyGram's board of directors.
Euronet is including a $69 million termination fee in the contract, 4 times higher than Ant Financial's $17.5 million termination fee.
MoneyGram did not respond to requests seeking comment. Ant Financial declined to comment.
Wells Fargo Securities, LLC is serving as financial adviser for Euronet, and Gibson, Dunn & Crutcher LLP is acting as legal adviser.
Editor's note: This article was originally published at 10:51 a.m. ET on March 14 and has been updated.