Ant's deal for MoneyGram, long opposed by Trump, is dead

Ant's deal for MoneyGram, long opposed by Trump, is dead

MoneyGram chief executive Alex Holmes attributed the decision to the "geopolitical environment" which had "changed considerably" since the pair first announced the proposed transaction almost a year ago. Ant submitted its proposal to the Committee on Foreign Investment in the United States several times, to no avail.

Ant Financial may have to retool its global ambitions after stiff American opposition scuppered what would have been its largest overseas acquisition. It began about a year ago, when Ant Financial made its offer for MoneyGram as part of a global expansion plan.

Some are nearly certain to read politics into this latest deal, noting that Trump has indicated he's willing to mix business with politics in the relationship with China.

All that said, this particular veto looks increasingly like par for the course, meaning we can probably expect to see a sharp slowdown, or even a halt, to any major M&A of USA financial and tech companies by Chinese buyers over the next couple of years.

The decision by the Committee on Foreign Investment (CFIUS) comes as a blow to Alibaba boss Jack Ma's push into the world's biggest financial market.

In September, the Trump administration blocked the sale of Oregon-based Lattice Semiconductor to private equity firm Canyon Bridge, its Chinese partner Yitai Capital, and Yitai's parent the China Venture Capital Fund Corp, over national security concerns.

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

Ant Financial disputes this.

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

"Similar to USA government pension funds investing in American companies, a small number of Chinese government investment funds have minority stakes in Ant Financial", the company said. "None of these investors participate in management or have board representation". In accordance with the Merger Agreement, simultaneous with termination of the agreement, Ant Financial paid MoneyGram a $30 million termination fee. Instead, the two companies said that they would try to work on other forms of partnerships in remittance and digital payments in China, India, the Philippines, and other Asian markets-as well as America.

Such firms that want to work more closely together better get used to developing workarounds.

A standard review by CFIUS can take as long as 75 days, and the companies had already gone through this process on three occasions trying to address the panel's concerns.



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