China’s Ant Financial Services Group and US-based money transfer firm MoneyGram International have called off their planned merger after failing to get the deal cleared by American regulatory officials.
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.
CFIUS is a multiagency committee led by the US Treasury whose task is to screen foreign investments for national-security concerns.
“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” MoneyGram Chief Executive Alex Holmes was quoted as saying in the press release.
Since the time of Ant Financial’s initial bid, which took place around the time of the inauguration of President Donald Trump, the CFIUS is believed to have become increasingly wary of Chinese firms.
The US government has toughened its stance on the sale of companies to Chinese entities, at a time when Trump is trying to put pressure on Beijing to help tackle North Korea’s nuclear ambitions and be more accommodative on trade and foreign exchange issues, Reuters noted.
Ant Financial, which is controlled by Alibaba Group founder Jack Ma, originally agreed to buy MoneyGram for US$880 million in January 2017. It later raised its bid to about US$1.2 billion after Euronet Worldwide lodged an unsolicited competing offer, the Journal noted.
Ant Financial paid MoneyGram a US$30 million termination fee following the collapse of the deal.
Ant Financial operates Alipay, which acts as the payments service of Alibaba. If the MoneyGram acquisition had gone through, the Chinese firm could have gained a foothold into financial services in North America.
The deal’s collapse represents a blow for Jack Ma, who owns Ant Financial together with Alibaba executives, Reuters noted.
Ant Financial and MoneyGram said they will now explore and develop initiatives to work together in remittance and digital payments in China, India, the Philippines and other Asian markets, as well as in the United States.
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