USA blocks Ant Financial's acquisition of MoneyGram


The Chinese payments company, which operates Alipay, is an affiliate of the Alibaba group and had hoped to buy U.S. money transfer company MoneyGram for $US880 million.

Ant Financial said it paid MoneyGram a US$30 million termination fee for the deal's collapse.

The two companies said in a joint statement Tuesday that they had been unable to secure approval from Committee on Foreign Investment in the United States (CFIUS) "despite extensive efforts to address the Committee's concerns", the Wall Street Journal reports.

The personal relationship did not sway the Trump administration, though, which has launched a number of anti-dumping trade cases against China and is in the process of investigating it over intellectual property issues.

However, Trump has been gracious to Ma, who he met with a year ago during the transition, calling the Alibaba executive chairman "a great entrepreneur, one of the best in the world".

The agreement had been under review by the Committee on Foreign Investment in the United States, the inter-agency body that vets deals that could give a foreign investor control of a US business.

MoneyGram CEO Alex Holmes via a prepared statement said that despite the best efforts of everyone involved to work cooperatively with the government panel, it is clear at this point that CFIUS is not going to approve the merger. "Despite our best efforts to work cooperatively with the USA government, it has now become clear that CFIUS (Committee on Foreign Investment in the U.S.) will not approve this merger". MoneyGram's Holmes said he hoped the initiative would lead to them being "the preferred money transfer option globally".

"The bonhomie that grew between China and the United States in Beijing in November, when the two signed hundreds of billions of dollars of deals, seems to be fading away as the US side is stuck in a zero-sum mentality", it said.

John Reynolds, a partner at Davis Polk in Washington, told the Financial Times that the Trump administration has been reluctant to approve deals involving Chinese takeovers of US companies.

MoneyGram shares were down 8.5 per cent at US$12.06 in after-market trading.

Alibaba, which owns Ant Financial together with Alibaba executives, saw the U.S. market as a way to expand overseas in the face of fierce domestic competition from the likes of Tencent's WeChat.

It was hoping to use MoneyGram as a springboard to the global market following the wide success of its core Alipay electronics payment service in its home China market. The potential deal was first announced in January 2016.

The collapse of the deal is a huge blow to Ant, which spent much of 2017 developing its mobile payment network beyond China and into Southeast Asia, India, Korea, Japan and other parts of Asia with a series of partnerships and investments. "Significant developments have been disclosed by MoneyGram since Euronet's offer and Euronet has not conducted any evaluation of the business in that time". "While we continue to view a transaction with MoneyGram as logical, there is no guarantee any offer will be made or any transaction will ultimately occur".