BEIJING (AFP) – 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.
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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 Mr Ma, Ant Financial – which provides mobile payment, lending and credit services to a mostly Chinese clientèle – 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 Mr 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.