BEIJING – China’s Ant Financial Services Group, an affiliate of the Alibaba Group, has given up hopes of buying United States firm MoneyGram due to their inability to obtain authorization from the US Committee on Foreign Investment.
The two companies announced in a statement, released in the US on Tuesday, the failure of the operation, which was formally a merger, although they added that they will continue cooperating on joint initiatives like remittance operations and digital payments.
The merger plans were announced on Jan. 27, 2017 and Ant Financial was expected to buy MoneyGram for $880 million.
“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” MoneyGram CEO Alex Holmes said in a joint statement.
“Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS (US foreign investment committee) will not approve this merger,” Holmes acknowledged.
Doug Feagin, President of Ant Financial International, said that although his company will not have the direct ownership of MoneyGram, the collaboration agreement announced on Tuesday implied that they are adding “a partner with global remittance capabilities to our ecosystem.”
The US Foreign Investment Committee is a body that brings together 16 US government departments and agencies to assess the implications of investments coming from abroad on US soil and vice versa for national security.
Following the announcement of the cancellation, MoneyGram’s shares, listed on NASDAQ, fell by almost 7 percent in electronic trade after the closure of US markets.
MoneyGram is one of the largest international money transfer providers, while Ant Financial Services Group is one of the leading providers of digital financial services and is owner of the Alipay online payment platform.