- Merger blocked by CFIUS
- Collaboration will see the two parties work together to impact the money transfers market
Following the US government’s refusal to approve Ant Financial’s bid to purchase the international money transfers giant MoneyGram for USD $1.2bn (AUD $1.53bn), the two firms have announced a strategic partnership.
The original deal was blocked by the Committee on Foreign Investment in the United States (CFIUS). MoneyGram issued a statement after the decision saying that the deal had been blocked “despite extensive efforts to address the Committee's concerns.”
MoneyGram CEO Alex Holmes explained that the geopolitical landscape had shifted significantly since the original announcement of a planned merger with the Chinese firm Ant Financial one year ago.
He added: “Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger. We are disappointed in the termination of this compelling transaction, which would have created significant value for our stakeholders.”
Now that the deal has been blocked, the two firms have announced that they have instead formed a “strategic business cooperation” which will include working collaboratively to launch combined initiatives in the international money transfers and cross-border payments markets.
The partnership will provide Ant Financial and MoneyGram customers with “user-friendly, rapid-response and low-cost money transfer services in China, India and the Philippines, among other Asian markets, as well as in the US and other key regions around the world.”
Doug Feagin, President of Ant Financial International, said that the new arrangement with MoneyGram adds a partner with global money transfers capabilities to the Chinese firm’s ecosystem. Although Ant Financial will not have direct ownership of MoneyGram, he added, a close working relationship with its team will now ensue, which will make the company’s platform more available — especially to unbanked and unserved communities across the world.
The original merger package was put together in January 2017. At that point, Ant Financial was offering to buy MoneyGram’s network of 350,000 outlets in 200 countries for USD $880m (AUD $1.12 bn). By April, it had raised its bid to USD $1.2bn.
