The high-profile US$1.2 billion bid of Ant Financial—Alibaba’s digital payment arm—to buy US-based money transfer service provider MoneyGram fails to get through after a U.S. government panel rejected it over national security concerns.
The deal has been seen as Alibaba’s move to expand Ant Financial’s footprint overseas when local competition from Tencent's WeChat payment service in China continues to intensify.
"The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” said MoneyGram CEO Alex. “Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS (Committee on Foreign Investment in the U.S.) will not approve this merger.
While the deal fails, MoneyGram and Ant Financial said they will explore and develop initiatives under a new strategic business cooperation to bring together their capabilities in remittance and digital payments to provide their respective customers with user-friendly, rapid-response and low-cost money transfer services into China, India and the Philippines, and other Asian markets, as well as in the U.S. and other key regions around the world.
As previously announced on April 16, 2017, MoneyGram and Ant Financial entered into an amended merger agreement under which Ant Financial would acquire all of the outstanding shares of MoneyGram for $18.00 per share in cash. In accordance with the Merger Agreement, simultaneous with termination of the agreement, Ant Financial paid MoneyGram a $30 million termination fee.