China’s Ant Financial drops $1.2 billion MoneyGram deal as US approval fails

The $1.2 billion deal between MoneyGram and Ant Financial, announced a year ago, had been submitted to the the Committee on Foreign Investment several times, but failed to allay its concerns about the security of US customers’ data. (Reuters)
Updated 03 January 2018
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China’s Ant Financial drops $1.2 billion MoneyGram deal as US approval fails

BEIJING: Ant Financial, an affiliate of Chinese Internet titan Alibaba, has been forced to abandon a $1.2 billion (SR4.5 billion) deal to buy US remittances firm MoneyGram after failing to get approval from regulators in Washington.
The decision by the Committee on Foreign Investment (CFIUS) will deal a blow to Alibaba boss Jack Ma’s push into the world’s biggest financial market and follows a number of moves to prevent Chinese purchases of US firms.
The companies jointly announced the termination of the proposed takeover on Tuesday, with MoneyGram chief executive Alex Holmes saying: “The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago.
“Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger.”
The deal, announced a year ago, had been submitted to the CFIUS several times, but failed to allay its concerns about the security of US customers’ data.
Controlled by Ma, Ant Financial — which provides mobile payment, lending and credit services to a mostly Chinese clientèle — has looked to expand abroad along with Alibaba, China’s largest e-commerce platform.
Nasdaq-listed MoneyGram’s shares sank in after-hours trading.
The two companies will still look to cooperate in other ways despite the setback, Doug Feagin, president of Ant Financial International, said in a statement.
“While Ant Financial won’t have a direct ownership relationship with MoneyGram, we look forward to working closely with the MoneyGram team to make our platform even more accessible — particularly to unbanked and underserved communities globally.”
The news comes almost a year after Ma met then President-elect Donald Trump, promising to bring a million jobs to the US.
The personal relationship did not sway the Trump Administration, though, which has launched a number of anti-dumping trade cases against China and is in the process of investigating it over intellectual property issues.
The administration labeled China a “revisionist” power last month.
The CFIUS, which reviews all foreign takeovers of US firms with potential national security concerns, has squashed a number of Chinese purchases of US businesses in recent years, as concern grows in Washington about selling critical technology to China.
In September, Trump blocked the sale of Oregon-based Lattice Semiconductor to private equity firm Canyon Bridge, its Chinese partner Yitai Capital and Yitai’s parent the China Venture Capital Fund Corp. over national security concerns.
The CFIUS has also thwarted takeovers US chip makers Micron Technology and Sandisk by state-owned Tsinghua Unigroup.


Oil prices drop amid surprise jump in US stockpiles

Updated 54 min 58 sec ago
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Oil prices drop amid surprise jump in US stockpiles

  • US West Texas Intermediate crude was down 36 cents, or 0.5 percent, at $67.72
  • On the demand-side, intensifying risks over trade tensions between the US and China could drag on the global economic outlook, BMI Research said

TOKYO: Oil prices dropped on Wednesday after an industry group reported that US crude inventories rose last week, defying analyst expectations for a significant reduction.
Brent futures were down 31 cents, or 0.4 percent, at $71.85 a barrel by 0240 GMT. They rose 32 cents to $72.16 a barrel on Tuesday, after earlier touching a three-month low.
US West Texas Intermediate crude was down 36 cents, or 0.5 percent, at $67.72. It settled up 2 cents at $68.08 a barrel the session before, coming off a nearly one-month low.
The benchmarks had steadied after big declines on Monday and last week as supply disruptions in Venezuela came to the fore and as analysts had been forecasting a decline of 3.6 million barrels in US inventories for the week through July 13.
But the specter of oversupply quickly returned, with a rise of more than 600,000 barrels in US crude stockpiles, reported by the American Petroleum Institute late on Tuesday.
Official numbers from the US Department of Energy’s Energy Information Administration are due at 10:30 a.m. EDT on Wednesday.
On the demand-side, intensifying risks over trade tensions between the US and China could drag on the global economic outlook, BMI Research said.
“Despite US-China trade tensions, the economic outlook is broadly positive, but a number of headwinds are emerging, not least a stronger dollar, rising inflationary pressures and tightening liquidity,” BMI said.
“Slowing trade growth will weigh on physical demand for oil, with the shipping, road and air freight sectors an important pillar of demand globally,” BMI said.
One US central banker added her voice late on Tuesday to those sounding caution on trade.
Kansas City Federal Reserve Bank President Esther George said that uncertainty over US trade policy could slow the economy, even if the recently imposed tariffs in and of themselves are too small to have a big impact.
George called trade policy a “significant” downside risk to her outlook for economic growth, even as tax cuts and other fiscal policy is an upside risk.