Failed US deal forces a rethink at Ant

Ant Financial may now have to throttle back plans to expand in the US as it begins preparations to go public in the next year or so.
Ant Financial may now have to throttle back plans to expand in the US as it begins preparations to go public in the next year or so.PHOTO: REUTERS

US blocks sale of MoneyGram to Jack Ma's financial services firm over security concerns

SHANGHAI • Ant Financial may have to retool its global ambitions after stiff American opposition scuppered what would have been its largest overseas acquisition.

The Chinese financial services giant controlled by Alibaba co-founder Jack Ma abandoned a plan to buy Dallas-based MoneyGram International after failing to win approval from a key government panel.

China's largest online wealth management and payments service may now have to throttle back plans to expand in the world's largest financial market as it begins preparations to go public in the next year or so.

The end of the bid comes almost a year after Mr Ma met with then United States President-elect Donald Trump and talked about creating a million American jobs.

Ant's US$1.2 billion (S$1.6 billion) deal for MoneyGram would have added a network of 350,000 agent locations in more than 200 countries and territories that it says reaches billions of accounts.  The US firm's shares plunged as much as 17 per cent in extended trading.

But the deal faced intense scrutiny from a government panel that has become more active in blocking Chinese investments. Ant submitted its proposal to the the Committee on Foreign Investment in the US (CFIUS) several times, to no avail.

Last year, two House of Representatives members said the acquisition could allow "malicious actors" to obtain data on US military personnel and their families who use the service.

NEW STRATEGY NEEDED

A lot of technology companies are becoming increasingly global, so they have to go to the US. But in terms of the approach, it will be less direct than finding a target and buying 100 per cent.

MR JEREMY CHOY, head of mergers and acquisitions at China Renaissance.

Ant and MoneyGram now plan to work together on initiatives in remittance and digital payments, they said in a joint statement. 

"Technology companies understand the situation and are evolving in their approach. They are doing more things organically, they are doing more strategic alliances," Mr Jeremy Choy, head of mergers and acquisitions at China Renaissance, told Bloomberg Television.

"We don't think this is the start of a trend where people just won't do things in the US. A lot of technology companies are becoming increasingly global, so they have to go to the US. But in terms of the approach, it will be less direct than finding a target and buying 100 per cent."

Ant Financial - formerly part of Mr Ma's Alibaba Group Holding - is already a behemoth in China, providing services from wealth management to credit checks. 

MoneyGram's chief executive officer Alex Holmes said in a statement: "The geopolitical environment has changed considerably since we first announced the proposed transaction. Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger."

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A version of this article appeared in the print edition of The Straits Times on January 04, 2018, with the headline 'Failed US deal forces a rethink at Ant'. Print Edition | Subscribe