The proposed acquisition of MoneyGram International Inc (NASDAQ:MGI) by China’s Financial has been blocked by the US regulators.
The US$1.2bn deal was set to be the highest profile takeover of a US company by a Chinese one, but the Committee on Foreign Investment in the United States (CFIUS) has declined to sanction it.
Shares in the US money transfer agent were down 5.7% to US$12.55 in pre-market trading; Financial, an affiliate of Chinese e-commerce giant Holding Ltd (), had been set to pay US$18 a share for MoneyGram stock.
Ant Financial will pay a US$30mln termination fee now the takeover has foundered.
“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” conceded Alex Holmes, the chief executive officer of MoneyGram.
In September, the US got cold feet over the “potential transfer” of intellectual property from the US to China and blocked the US$1.3bn sale of Corp () to a private equity outfit backed by Chinese investors.
“Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger,” Holmes said.
Although a full-blown merger is off the table, the two companies will collaborate to expand their remittance and digital payments services across the globe.
Ant Financial operates Alipay, an online payments service that is similar to the service offered by Holdings Inc ().
“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,” said Doug Feagin, the president of Ant Financial International.