US government blocks MoneyGram’s sale to Ant Financial, a USD 1.2 billion deal – the companies decides to work together on new strategic initiatives

Ant Financial announced plans to buy MoneyGram in January 2017 as a means to develop its cross-border payment network into the US, and major corridors including India and the Philippines, but it explored and developed initiatives for collaboration with the company instead. Per terms of the agreement, Ant has paid USD 30 million to MoneyGram for terminating the acquisition process.

The failure of the deal will impact Ant Financial, the company spending resources in 2017 developing its mobile payment network beyond China and into Southeast Asia, India, Korea, Japan and other parts of Asia with a series of partnerships and investments. MoneyGram would have added the US and increased the potential to give Ant a physical network of cross-border offices and a large share of the global cross-payment industry.

Official press release
MoneyGram and Ant Financial Services Group announced that they have mutually agreed to terminate their Amended Merger Agreement following the inability of the companies to obtain the required approval for the transaction from the Committee on Foreign Investment in the United States („CFIUS”), despite extensive efforts to address the Committee’s concerns. MoneyGram and Ant Financial also announced that they plan to work together on new strategic initiatives in the remittance and digital payments markets that will help each company achieve its objective of enabling consumers around the world to enjoy better money transfer services.

Alex Holmes, Chief Executive Officer of MoneyGram, said, „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 U.S. 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. The MoneyGram Board and management team greatly appreciate the significant time and energy that so many of our colleagues have devoted to trying to complete the transaction.”

Under the new strategic business cooperation, MoneyGram and Ant Financial will explore and develop initiatives to bring together their capabilities in remittance and digital payments to provide their respective customers with user-friendly, rapid-response and low-cost money transfer services into China, India and the Philippines, among other Asian markets, as well as in the U.S. and other key regions around the world.

Mr. Holmes continued, „While we are disappointed by this outcome, we are confident in the future of MoneyGram and are excited about the benefits of our future cooperation with Ant Financial. By increasing access to digitally enabled customer wallets on the receiving side, we will be able to reduce distribution costs and improve transaction processing time. Together with Ant Financial, we hope to be the preferred money transfer option globally, and we look forward to bringing the considerable benefits of this collaboration to all of our stakeholders, including stockholders, customers, agents and employees.”

Doug Feagin, President of Ant Financial International, said, „We remain excited and encouraged about Ant Financial’s future prospects around the world as we continue to establish new partnerships and pursue opportunities that bring innovative services to our ecosystem. Establishing this new strategic cooperation with MoneyGram will add a partner with global remittance capabilities to our ecosystem and, 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 – and create even better experiences for our customers.”

As previously announced on April 16, 2017, MoneyGram and Ant Financial entered into an amended merger agreement under which Ant Financial would acquire all of the outstanding shares of MoneyGram for $18.00 per share in cash. In accordance with the Merger Agreement, simultaneous with termination of the agreement, Ant Financial paid MoneyGram a $30 million termination fee.

Source: MoneyGram