What the collapse of MoneyGram-Ant Financial merger means for India

US-POLITICS-TRUMP

Remember that when Ant Financial had initially signed a deal with MoneyGram for $800 million past year, the combined entity would be able to able to tap the 450 million registered users on Alipay (in China), and the 200 million users registered with Paytm (in India) for money transfers across borders.

One year on, however, USA security concerns have torpedoed Ma's plans for a $1.2 billion takeover of the Dallas-based MoneyGram International Inc (MGI.O) by Ant Financial, an Alibaba affiliate. Trump told reporters in the Trump Tower lobby that Ma was a "great, great entrepreneur".

The CFIUS, an arm of the US Treasury that runs the rule over the security implications of acquisitions by foreign companies, blocked the deal citing national security concerns.

"While we are disappointed by this outcome, we are confident in the future of MoneyGram and are excited about the benefits of our future cooperation with Ant Financial", said MoneyGram chief executive Alex Holmes. "Despite our best efforts to work cooperatively with the USA government, it has now become clear that CFIUS will not approve this merger", said MoneyGram CEO, Alex Holmes.

Over the past decade, a quarter of all Chinese bids for USA companies by value have been withdrawn, according to Thomson Reuters data.

But U.S. lawmakers - whose biggest rebuff to China was delivered in 2005, when congressional opposition derailed a $19.5 billion bid for Unocal by the Chinese state-owned oil major CNOOC - have once more become an increasing concern for dealmakers.

A standard CFIUS review lasts up to 75 days, and the two companies had gone through the process three times to address the concerns. According to a report from Reuters, authorities saw the deal as a recipe for national security concerns, because it would give a Chinese company access to sensitive data that could be used to identify USA citizens. However, Ant Financial has also revealed that it will also pursue alternative opportunities having failed to acquire Moneygram.

Ant Financial is just the latest Chinese company to face barriers to buying out United States businesses in recent months.

The deal, announced a year ago, had been submitted to CFIUS several times, but failed to allay its concerns about the security of United States customers' data. The charm offensive that Ma began soon after Donald Trump's election, and continued through 2017, clearly didn't help dispel the distrust of China that's taken hold in Washington-and looks set to deepen this year.

The merger was originally valued up to $1.2 billion.

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