Update | Ant Financial’s Moneygram deal a victim of ‘quite difficult’ political environment, say analysts
Failure of the deal a stumbling block in Ant Financial’s quest to expand its fintech services globally as it competes with rival Tencent
The US government’s rejection of Ant Financial US$1.2 billion acquisition of money transfer firm Moneygram International poses a major setback for the Chinese company’s global ambitions, highlighting a political climate that is not welcoming to Chinese firms.
Ant Financial and Moneygram on Tuesday said in a joint statement that the deal failed to obtain approval from the Committee on Foreign Investment in the United States (CFIUS), a US government panel that assesses the national security implications of foreign investments in American companies.
The deal was seen as an important one for Ant Financial because Nasdaq-listed Moneygram, based in Dallas, Texas, is the second-largest money transfer provider globally with more than 350,000 agent locations in over 200 countries. Acquiring Moneygram would have given Ant Financial the international reach it required to kick start its global ambitions, including in areas such as South America, according to IDC research manager Michael Yeo.
“The Moneygram deal falling through means that Ant Financial will have to go back to making single partnerships if it wants to have organic growth of their services in the West, when they could have acquired a global network in one fell swoop,” Yeo said.