US Blocks Sale of MoneyGram to Ant Financial

Jack Ma founder and executive chairman of Alibaba Group in Shanghai China on Dec. 5th 2017

After MoneyGram announced that Ma's China-based Ant Financial was walking away from its $1.2 billion merger deal, its shares tumbled 6.5 percent in after-hours trading, to $12.45, below the price in March before an auction for the company began.

MoneyGram International Inc. shares fell more than 8% late Tuesday after the Texas-based money transfer company and Ant Financial Services group, an affiliate of China-based Alibaba Group Holding Ltd., said they have agreed to end their merger agreement after months of wrangling with the US government. Trump told reporters in the Trump Tower lobby that Ma was a "great, great entrepreneur".

The chiefs of MoneyGram and Ant Financial said the sale was canceled after opposition from the Committee on Foreign Investment in the United States (CFIUS).

MoneyGram CEO Alex Holmes said the geopolitical environment has "changed considerably" since the pair first announced their deal in January 2017.

According to Reuters, the committee's concerns centered on the safety of financial data that could be used to identify us citizens. A lot of technology companies are becoming increasingly global, so they have to go to the US.

The two companies, MoneyGram and Ant Financial, said that it was clear that Cfius would not approve the deal, despite their efforts to quell concerns. A bipartisan effort is underway to pass a law to further strengthen CFIUS in order to address security concerns from Chinese and other acquisitions.

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The cancellation ends an attempt by Ant - the Alibaba affiliate that operates Alipay - to acquire us -based MoneyGram.

"CFIUS, by statute, focuses only on national security when reviewing proposed foreign investments, but notions of national security have evolved substantially in recent years", he said.

While China dealmakers acknowledged the signal sent by Ant's MoneyGram failure, most viewed it as a one-off situation. In November, the buyout firm Orient Hontai Capital dropped a $1.4 billion bid for AppLovin, a USA mobile marketing group, because of push back from CFIUS.

The Chinese behemoth was forced to raise its initial offer for MoneyGram back in April after Euronet stepped into the fray. This is the most high-profile attempted acquisition by a Chinese company to be blocked by the White House administration. "We can not afford to ignore well-coordinated Chinese investments that target our critical and financial infrastructure", they added.

The merger was originally valued up to $1.2 billion.

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