22/01/2018
US government blocks MoneyGram acquisition by Alibaba
Alibaba as one of the largest online marketplaces decided to make a bold move and acquire MoneyGram, a company that would allow them easier access to the US customers, and improve their effectiveness in Philippines and India. The proposed merger was estimated to $1.2 billion and the initial talks have been kicked off approximately a year ago.
At the moment when all pointed to the successful conclusion of negotiations and signing of the merger, the US regulatory body for foreign investments CFIUS has lowered the ramp and blocked the deal completely!
Of course, the reactions by Ant Financial, the financial division of Alibaba that was in charge of the acquisition was somewhat gloom. They confirmed that the deal was blocked and that there will be no merger, but they also left the door open for future cooperation as the company like MoneyGram can be utilised in a partnership role and still allow them certain advantages. Of course, without the full control over the service the effects are not expected to be as impactful as if the merger took place. The main aim of this partnership will be to make the products sold via Alibaba available to the customers in underdeveloped countries available, as the cash transactions are often the only means they have at their disposal.
The representatives of MoneyGram gave the explanation of what transpired, claiming that the geopolitical situation has changed drastically in the past year since the merger talks commenced and that it had a crucial impact on the final decision. They confirmed that the significant part of the decision making had a political background, but that it was completely out of their jurisdiction, and that their hands were tied. As a US company, they are obliged to respect the decisions made by the CFIUS and that makes the situation about the potential merger final.