Global News

U.S. blocks sale of Moneygram to Chinese firm

U.S. blocks sale of Moneygram to Chinese firm

Alex Holmes, chief executive officer of MoneyGram, cited a "change in the geopolitical environment" since it first announced the proposed transaction previous year.

However, Euronet argued the takeover shouldn't be cleared because of the proximity to United States military bases of many MoneyGram vendors.

Ant Financial is already a behemoth in China, providing services from wealth management and insurance to credit checks and consumer loans.

MoneyGram is calling off its merger with a Chinese financial services giant after failing to get approval from the USA government. But now it is not to be, and it will be interesting to see what approach Ant - which is hotly tipped to go public in a massive IPO - will take to fill the void beyond this new "strategic business cooperation" with MoneyGram.

The deal between Ant Financial, an affiliate of Jack Ma's tech company Alibaba, and the American money transfer service was first announced in January 2017.

After a year of trying to appease US regulators, Ant Financial and MoneyGram have terminated their merger agreement, challenging the Chinese company's strategy for global expansion.

In September, Trump vetoed the proposed $1.3 billion acquisition of a semiconductor manufacturer, Lattice Semiconductor, by a Chinese government-financed buyer, Canyon Bridge Capital Partners, after CFIUS objected.




Ant's US$1.2 billion (S$1.6 billion) deal for MoneyGram would have added a network of 350,000 agent locations in more than 200 countries and territories that it says reaches billions of accounts.

"Should this transaction be approved, the Chinese government would gain significant access to, and information on, financial markets and specific global consumer money flows", they wrote.

The Chinese government holds a 15% stake in Ant Financial, according to the congressmen, who are both Republicans.

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

Under terms of the agreement between the two companies, Ant will pay MoneyGram a $30 million termination fee.

Such firms that want to work more closely together better get used to developing workarounds. But despite "extensive efforts" to address the concerns of the CFIUS, the companies could not obtain the required approval and the deal was mutually terminated today.

Update, Jan. 4: This story was updated with comment from Ant Financial.


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