Ant Financial’s acquisition of MoneyGram has been called off after the companies were unable to convince the Committee on Foreign Investment in the United States (CFIUS) to approve the deal.
The Chinese payments company, which operates Alipay, is an affiliate of the Alibaba group and had hoped to buy US money transfer company MoneyGram for $US880 million. That initial agreement was amended in April 2017. But despite “extensive efforts” to address the concerns of the CFIUS, the companies could not obtain the required approval and the deal was mutually terminated today.
The news has plunged MoneyGram shares down nearly nine per cent. While Ant Financial will pay MoneyGram a $US30 million termination fee, in accordance with their agreement.
“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago. Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger,” said MoneyGram CEO, Alex Holmes.
“We are disappointed in the termination of this compelling transaction, which would have created significant value for our stakeholders.”
Ant Financial and MoneyGram said they plan to work together on future strategic initiatives in the digital payments sector. MoneyGram’s Holmes said he hoped the initiative would lead to them being “the preferred money transfer option globally”.
“By increasing access to digitally enabled customer wallets on the receiving side, we will be able to reduce distribution costs and improve transaction processing time,” he said.
Ant Financial president, Doug Feagin, echoed the excitement around the revised partnership and said he was encouraged by the innovation opportunities it presented.
“Establishing this new strategic cooperation with MoneyGram will add a partner with global remittance capabilities to our ecosystem and, 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 – and create even better experiences for our customers,” Feagin said.