China's Ant Financial drops MoneyGram deal as US approval fails

Photo_Web_Alibaba_030118

File: Ant Financial, an affiliate of Chinese internet titan Alibaba, has been forced to abandon a $1.2-billion deal to buy US remittances firm MoneyGram.

File: Ant Financial, an affiliate of Chinese internet titan Alibaba, has been forced to abandon a $1.2-billion deal to buy US remittances firm MoneyGram.

Photo_Web_Alibaba_030118

File: Ant Financial, an affiliate of Chinese internet titan Alibaba, has been forced to abandon a $1.2-billion deal to buy US remittances firm MoneyGram.

File: Ant Financial, an affiliate of Chinese internet titan Alibaba, has been forced to abandon a $1.2-billion deal to buy US remittances firm MoneyGram.

BEIJING - Ant Financial, an affiliate of Chinese internet titan Alibaba, has been forced to abandon a $1.2-billion deal to buy US remittances firm MoneyGram after failing to get approval from regulators in Washington.

The decision by the Committee on Foreign Investment (CFIUS) will deal a blow to Alibaba boss Jack Ma&39;s push into the world&39;s biggest financial market and follows a number of moves to prevent Chinese purchases of US firms.

The companies jointly announced the termination of the proposed takeover on Tuesday, with MoneyGram chief executive Alex Holmes saying: "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."

The deal, announced a year ago, had been submitted to the CFIUS several times, but failed to allay its concerns about the security of US customers&39; data.

Controlled by Ma, Ant Financial -- which provides mobile payment, lending and credit services to a mostly Chinese clientle -- has looked to expand abroad along with Alibaba, China&39;s largest e-commerce platform.

Nasdaq-listed MoneyGram&39;s shares sank in after-hours trading.

The two companies will still look to cooperate in other ways despite the setback, Doug Feagin, president of Ant Financial International, said in a statement.

"While Ant Financial won&39;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."

The news comes almost a year after Ma met then President-elect Donald Trump, promising to bring a million jobs to the US.

The personal relationship did not sway the Trump Administration, though, which has launched a number of anti-dumping trade cases against China and is in the process of investigating it over intellectual property issues.

The administration labelled China a "revisionist" power last month.

The CFIUS, which reviews all foreign takeovers of US firms with potential national security concerns, has squashed a number of Chinese purchases of US businesses in recent years, as concern grows in Washington about selling critical technology to China.

In September, Trump blocked the sale of Oregon-based Lattice Semiconductor to private equity firm Canyon Bridge, its Chinese partner Yitai Capital and Yitai&39;s parent the China Venture Capital Fund Corp over national security concerns.

The CFIUS has also thwarted takeovers US chip makers Micron Technology and Sandisk by state-owned Tsinghua Unigroup.