Chinese billionaire Jack Ma (馬雲) has dropped his bid to buy US money transfer company MoneyGram International Inc after Washington rejected the US$1.2 billion deal in a fresh example of heightened US scrutiny of Chinese investment.
MoneyGram and Ma’s Ant Financial Services Group (螞蟻金服) failed to gain approval from the Committee on Foreign Investment in the United States (CFIUS), despite efforts to respond to its concerns, MoneyGram chief executive officer Alex Holmes said in a statement on Tuesday.
The panel reviews proposed foreign acquisitions of US companies on national security grounds.
The grounds for possible CFIUS objections were not immediately clear.
MoneyGram shares fell 6.8 percent in after-hours trading on Tuesday to US$12.40 per share.
“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” Holmes said. “Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger.”
Ma is the founder of Alibaba Group Holding Ltd (阿里巴巴), the world’s biggest online commerce platform by total sales.
The failure is a setback to his ambitions to expand into global markets.
Ma was among the stream of Chinese business leaders who visited US President Donald Trump at Manhattan’s Trump Tower in January last year following his election.
At the time, Alibaba said it could create 1 million jobs in the US by helping small businesses sell their products to Chinese and other Asian consumers.
Trump told reporters in the Trump Tower lobby that Ma was a “great, great entrepreneur.”
Ant Financial, which is linked to Alibaba, in April last year agreed to buy MoneyGram.
Calling off the deal means Ant Financial would pay a US$30 million termination fee to MoneyGram, the statement said.
CFIUS has approved almost all proposed Chinese investments, but a handful of high-profile rejections have made potential Chinese investors skittish.
In September last year, Trump vetoed the proposed US$1.3 billion acquisition of a semiconductor manufacturer, Lattice Semiconductor Corp, by a Chinese government-financed buyer, Canyon Bridge Capital Partners LLC, after CFIUS objected.
A White House statement at that time cited the importance of “semiconductor supply chain integrity” and the potential transfer of technology to a foreign buyer.
Chinese companies are on a global buying spree to acquire technology and brands.
Some purchases of high-tech companies have prompted criticism they might represent security threats or the loss of important US national assets.
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