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US blocks MoneyGram sale to China’s Ant Financial

  • Published at 07:12 pm January 3rd, 2018
US blocks MoneyGram sale to China’s Ant Financial
Ant Financial, an affiliate of Chinese internet titan Alibaba, has been forced to abandon a $1.2 billion deal to buy US remittances firm MoneyGram after failing to get approval from regulators in Washington. The decision by the Committee on Foreign Investment (CFIUS) will deal a blow to Alibaba boss Jack Ma’s push into the world’s biggest financial market and follows a number of moves to prevent Chinese purchases of US firms. The companies jointly announced the termination of the proposed takeover on Tuesday, with MoneyGram chief executive Alex Holmes saying: “The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago. “Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger.” The deal, announced a year ago, had been submitted to the CFIUS several times, but failed to allay concerns about the security of US customers’ data. “We hope the US can create a level playing field and predictable environment for Chinese enterprises to invest and start up businesses in the US,” Chinese foreign ministry spokesman Geng said during a regular news briefing in response to a question about the deal. Controlled by Ma, Ant Financial - which provides mobile payment, lending and credit services to a mostly Chinese clientele - has looked to expand abroad along with Alibaba, China’s largest e-commerce platform. Nasdaq-listed MoneyGram’s shares sank in after-hours trading. The two companies will still look to cooperate in other ways despite the setback, Doug Feagin, president of Ant Financial International, said in a statement. “While Ant Financial won’t have a direct ownership relationship with MoneyGram, we look forward to working closely with the MoneyGram team to make our platform even more accessible - particularly to unbanked and underserved communities globally.” The news comes almost a year after Ma met then-President-elect Donald Trump, promising to bring a million jobs to the US. 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. The administration labelled China a “revisionist” power last month. The CFIUS, which reviews all foreign takeovers of US firms with potential national security concerns, has squashed a number of Chinese purchases of US businesses in recent years, as concern grows in Washington about selling critical technology to China.
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