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 USA government.
The deal, announced a year ago, had been submitted to CFIUS several times, but failed to allay its concerns about the security of United States customers' data. A lot of technology companies are becoming increasingly global, so they have to go to the US. India is one of the large markets in the world for inward remittances. Up to now, almost all the deals to be vetoed have come from buyers with strong links to Beijing, either directly or through government-supplied financing.
"We don't think this is the start of a trend where people just won't do things in the US".
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Also in accordance with the merger agreement, Ant Financial will pay MoneyGram a $30 million termination fee.
Controlled by Ma, AntFinancial - which provides mobile payment, lending and credit services to a mostly Chinese clientèle - has looked to expand overseas along with Alibaba, China's largest e-commerce platform.
CFIUS's decision delivers a blow to Ant Financial, controlled by Alibaba's billionaire co-founder Jack Ma. It was hoping to change that with the MoneyGram move, which originally saw it offer $880 million for the U.S. company. The company claims 30,000 locations in the US and more than 350,000 in countries around the world. But the Committee on Foreign Investment in the United States, which decides whether a foreign investor can take control of a USA business, never granted approval of the deal.
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Ant Financial's proposed takeover of MoneyGram had been contentious among some lawmakers. At the heart of the matter was CFIUS's concerns about privacy protection for MoneyGram's millions of users. That led the pair to decide they would never be able to satisfy the agency, leading them to drop their marriage. "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".
This particular deal comes after the U.S. has shot down a string of other purchases under Trump.
The deal between MoneyGram and Ant Financial was seen as a test of the Trump administration's political and regulatory approach with China.
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Ant Financial Services Group, formally the financial services arm of Alibaba Group Holding Ltd., had initially offered to buy MoneyGram for $880 million, but later raised its offer to $1.2 billion after a brief bidding war erupted.