Jan. 2 (UPI) -- MoneyGram called off a deal on Monday to merge with an affiliate of one of China's largest companies after the U.S. government failed to grant approval.
Dallas-based MoneyGram, the second-largest money transfer company in the world, was in the process of getting bought by Ant Financial, an affiliate of Chinese conglomerate Alibaba, for $1.2 billion since April. But the Committee on Foreign Investment in the United States, which decides whether a foreign investor can take control of a U.S. business, never granted approval of the deal.
The Treasury Department presides over CFIUS and said the agency is "prohibited by statute from publicly disclosing information filed with CFIUS," CNN Money reported.
But MoneyGram CEO Alex Holmes blamed the current "geopolitical environment" for the reason the deal was not approved.
"Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger," Holmes said in a statement. "We are disappointed in the termination of this compelling transaction, which would have created significant value for our stakeholders."
John Reynolds, a partner at Davis Polk in Washington, told the Financial Times that the Trump administration has been reluctant to approve deals involving Chinese takeovers of U.S. companies.
"The deeper we get into this administration, the clearer it appears that skepticism about Chinese deals has sharply increased," Reynolds said.
Although the deal for Ant Financial to buy MoneyGram has been shelved, Alibaba and MoneyGram will form a "new strategic business cooperation" to expand remittance and payment services.
"Establishing this new strategic cooperation with MoneyGram will add a partner with global remittance capabilities to our ecosystem," said Doug Feagin, president of Ant Financial International. "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."