The monumental deal of $1.2 billion between Ant Financial and U.S money transfer company MoneyGram has been sabotaged. A huge setback for the global market.
All efforts to strengthen ties in the economic front have been put to an end now.
China’s Ant Financial is the secondary outlet of the renowned E-commerce company Alibaba. The U.S has officially cancelled the deal, alleging such an adventure as a threat to the national security, especially concerning hypersensitive information.
Last year in January 2017, Jack Ma (the billionaire chairman of Alibaba) and Donald Trump had met. The acquisition of MoneyGram was to be the largest by Ant Financial.
Jack Ma promised the U.S President that China’s induction into the U.S market will create job openings for almost 1 million Americans.
But sadly, this recent deal breakdown has been a major setback for Jack Ma and his Ant Financial. Ant Financial had paid $30 Million to MoneyGram as a termination fee for the unsuccessful deal signing.
“It seems more of a political move above anything else.” Jack Ma said.
Business OR Politics?
U.S had severe concerns, related how Alibaba works with IP holders & data sharing.
The Committee for Foreign Investment in the United States (CFIUS) had outrageously rejected the proposal, calling it against the sovereignty of their people.
The national security implication is a hot topic within the U.S. Therefore, Washington had no other choice than to reject the high profile deal.
On the other side, both Ant Financial and Alibaba wanted to expand overseas in order to counter the fierce rival Tencent Holding and his world renowned WeChat.
MoneyGram’s chief executive Alex Holmes has also shown an outburst on the recent collapse. He believes that the “geopolitical scenario changed drastically” within a year.
Chinese Foreign Minister has shown great grief saying that U.S should provide better avenues for the Chinese enterprises. Cooperation in trade and business is in the benefit of both the leading world powers, he added.
Strikingly, the U.S officials say that Chinese companies lack reputation for privacy data & data protection.
They also believe that potential data and information would go into the hands of the Chinese if local citizens will work in their enterprises.
Ultimately, the collapse was a major blow for both parties MoneyGram and Ant Financial. MoneyGram’s shares fell 8.5 % below the very next day according to reports.
The cold war in the commercial sector suggests that more upcoming deals can also face the same consequences. However, MoneyGram and Ant Financial have said that they will work together and explore new avenues globally.
Trust deficit is the only thing that symbolizes the ties between U.S and China, the main cause behind MoneyGram deal’s demise.
