US stopped Alibaba’s project to buy MoneyGram

6 years ago - Published in Finance, Fundamental Analysis

The proposed acquisition of global payment service MoneyGram by Alibaba’s Ant Financial is off after the U.S. Government blocked the $1.2 billion deal.

Ant Financial, the Alibaba affiliate which controls Alipay — China’s top mobile wallet — and other financial services, announced a deal to buy Nasdaq-listed MoneyGram in April 2017 after it beat off a rival bid from Euronet. Ant initially bid for MoneyGram in January 2017 as a means to develop its cross-border payment network into the U.S., and major corridors including India and the Philippines, but instead it will “explore and develop initiatives” to collaborate with MoneyGram’s business.

“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 U.S. government, it has now become clear that CFIUS [Committee on Foreign Investment in the United States] will not approve this merger,” MoneyGram CEO Alex Holmes said in a statement.

The collapse of the deal represents a particular blow for Mr Ma, who is the executive chairman of US-listed Chinese internet marketplace Alibaba. He owns Ant Financial together with other Alibaba executives.

His aim through the acquisition of Moneygram was to expand Ant Financial's global interests as it faces fierce domestic competition from rival Tencent Holdings' WeChat payment platform.

Ma, a Chinese citizen who appears frequently with leaders from the highest echelons of the Communist Party, had promised Trump in a meeting a year ago that he would create 1 million U.S. jobs.

While job creation is high on Mr Trump's list of priorities, critics have accused his administration of following a damaging protectionist trade agenda. Financial services has not traditionally been an area of concern for regulators as they focus more on cyber security.

Other high-profile deals to have been blocked include China-backed buyout fund Canyon Bridge Capital's $1.3bn takeover of US chip maker Lattice Semiconductor Corp.

The planned acquisition of mobile marketing firm AppLovin by another China-based firm was also stopped. MoneyGram shares fell 8.5 percent in after-market trading.