U.S. nixes Alibaba arm’s $1.2B bid to buy MoneyGram
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.China relationship.
Ant Financial, controlled by Alibaba founder and billionaire Jack Ma, a year ago had announced its intention to acquire Dallas-based MoneyGram International Inc., a move that would have helped solidify a financial presence in the U.S. for Ma and Alibaba.
But the two companies could not get approval from the Committee on Foreign Investment in the United States, a Treasury Department-run multiagency panel that evaluates foreign acquisitions of U.S. companies for national security concerns.
President Trump has had a complex relationship with China as he has sought to even what he calls “a very unfair and one-sided” trade relationship while seeking China’s help in pressuring North Korea into giving up nuclear weapons.
However, Trump has been gracious to Ma, who he met with a year ago during the transition, calling the Alibaba executive chairman “a great entrepreneur, one of the best in the world.”
Ant Financial and MoneyGram attempted to address the committee’s concerns, MoneyGram CEO Alex Holmes said. “The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” he said in a statement. “Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger.”
The two companies said they do plan to collaborate on improving global money transfers, especially in China, India and the Philippines. “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,” Ant Financial president Doug Feagin said in a statement.
Ant Financial paid MoneyGram a $30 million termination fee.
Shares of MoneyGram fell 9% Wednesday to $12.11. Alibaba’s U.S. shares rose 0.2% to $184.
Ant Financial operates Alipay, used by 520 million Chinese as an online payment system. In May, Alipay cemented a deal with New York-based payment tech firm First Data, giving U.S. stores the ability to accept Alipay from Chinese tourists and overseas customers.
The scuttled Ant Financial-MoneyGram deal potentially opens the door for Leawood, Kan.-based global electronic payments processing firm Euronet, which said its March bid for MoneyGram was worth 15% more than Ant’s.