CFIUS refers to the Committee on Foreign Investment in the United States, an inter-agency committee that is chaired by the Treasury Department, and that examines proposed deals from the standpoint of national security.
MoneyGram International Inc. shares fell more than 8% late Tuesday after the Texas-based money transfer company and Ant Financial Services group, an affiliate of China-based Alibaba Group Holding Ltd., said they have agreed to end their merger agreement after months of wrangling with the USA government.
"We don't think this is the start of a trend where people just won't do things in the US".
But U.S. lawmakers - whose biggest rebuff to China was delivered in 2005, when congressional opposition derailed a $19.5 billion bid for Unocal by the Chinese state-owned oil major CNOOC - have once more become an increasing concern for dealmakers.
Ant Financial operates Alipay, which is used by 520 million Chinese as an online payment system.
The collapse of the deal is a huge blow to Ant, which spent much of 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. The Euronet proposal was seen as more favourable to U.S. lawmakers.
JFWBK's Michael Freitag, Joseph Sala and Viveca Tress work the MoneyGram account.
MoneyGram is calling off its merger with a Chinese financial services giant after failing to get approval from the US government.
A look at MoneyGram's statement seems to indicate that CFIUS didn't actually veto the deal outright, but instead was continuing to indicate it wasn't satisfied with Ant's assurances aimed at easing security concerns.
From my perspective, CFIUS's concerns are probably unmerited, at least in terms of sharing information with Beijing, since Ant Financial is a private company and isn't subject to Beijing's whims for its offshore operations.
Ant Financial had to raise its bid by 36% in order to counter an unsolicited bid from Kansas-based electronic payments company Euronet. (NASDAQ:LSCC) by a Chinese buyer, but other vetoes also date back from before Trump.
"After almost a year of deliberations, CFIUS has scuppered [Ma's] plans - and delivered a bleak precedent for any future tilts at USA assets", the FT said.
Billionaire businessman Jack Ma on Tuesday abandoned his attempt to buy MoneyGram after getting the cold shoulder on the deal from President Trump's regulators. But Trump promised on his campaign trail to be tougher with China in order to narrow the US's widening trade deficit with the country.