US Denies Ma Moneygram Deal

NOT SOLD... A Moneygram logo is seen outside a bank in Vienna Austria

NOT SOLD... A Moneygram logo is seen outside a bank in Vienna Austria

In the latest sign yet that the Trump Administration intends to take a hard line toward Chinese M&A, Washington has killed a $1.2 billion deal that would have seen Alibaba-affiliated (NYSE:BABA) Ant Financial purchase United States money-transfer specialist MoneyGram International (NYSE:MGI).

"While we are disappointed by this outcome, we are confident in the future of MoneyGram and are excited about the benefits of our future cooperation with Ant Financial", said MoneyGram chief executive Alex Holmes.

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.

Since the time of Ant Financial's initial bid, which took place around the time of the inauguration of President Donald Trump, the CFIUS is believed to have become increasingly wary of Chinese firms.

"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", he said in a statement.

Chinese takeovers of American companies have prompted other warnings from lawmakers about risks to national security.

Chinese companies past year invested more than $130 billion in the US, up from just $21.5 billion in 2012, according to the Rhodium Group research firm.

However, Euronet argued the takeover shouldn't be cleared because of the proximity to USA military bases of many MoneyGram vendors. He was attempting to expand the footprint of Ant Financial amidst fierce competition domestically from rival Tencent Holdings, the owner of the messaging app WeChat and its payments app.

The merger was originally valued up to $1.2 billion.

Shares of Moneygram (MGI) fell 9% Wednesday to $12.11.

Tuesday night, Euronet issued a statement saying that while acquiring MoneyGram is still backed by "compelling commercial logic", the company would not guarantee a new offer would be made. "However, significant developments have been disclosed by MoneyGram since Euornet's offer and Euronet has not conducted any evaluation of the business in that time", the company said.

The U.S. has blocked the $1.2 billion sale of money-transfer service Moneygram to Ant Financial, an affiliate of Chinese e-commerce giant Alibaba - the latest sign of strain in the U.S. "They are doing more things organically, they are doing more strategic alliances", Mr Jeremy Choy, head of mergers and acquisitions at China Renaissance, told Bloomberg Television.

MoneyGram and Ant Financial also announced that the two plan to work together on new initiatives in the digital payment market that will directly help achieve both their objective to gain worldwide consumers regardless of the merger.

In India, MoneyGram is an entity authorized by the Reserve Bank of India for accepting cross-border inward remittances. But this particular veto is also noteworthy because it's one of the largest so far involving a purely private sector Chinese buyer.