USA security concerns sink Ant Financial-MoneyGram deal

USA security concerns sink Ant Financial-MoneyGram deal

USA security concerns sink Ant Financial-MoneyGram deal

The two companies failed to get regulatory approval from the US Committee on Foreign Investment (CFIUS), despite lengthy efforts to amend the $1.2bn merger in order to satisfy the Committee.

"We don't think this is the start of a trend where people just won't do things in the US".

Ant Financial operates Alipay, which acts as the payments service of Alibaba.

Chinese companies are on a global buying spree to acquire technology and brands.

The scuttled Ant Financial-Moneygram deal potentially opens the door for another bidder: Leawood, Kan. -based global electronic payments processing firm Euronet, which said its March bid for Moneygram was worth 15% more than Ant's. 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.

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

Ant and MoneyGram still plan to work together. Launched in 2004 as Alipay it now has 520 million users.

A look at MoneyGram's statement seems to indicate that CFIUS didn't actually veto the deal outright, but instead was continuing to indicate it wasn't satisfied with Ant's assurances aimed at easing security concerns. However, a spokesperson for Ant Financial said the company is "neither owned nor controlled by the Chinese government".

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

This particular deal comes after the United States has shot down a string of other purchases under Trump. 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.

Ant Financial in April upped the deal to buy MoneyGram to $18 a share, after a competitor came in with an unsolicited offer in the increasingly politicized takeover battle.

That rejection comes as tensions rise between China and the USA, and the Trump Administration's growing concern about the theft of American intellectual property. In particular, he wants China to put more pressure on North Korea to end its nuclear program, and thus, some might be saying he's using this kind of veto to show China what might happen if it doesn't become more assertive on that front.

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