Ant Financial’s takeover bid for MoneyGram is running into further trouble with US President Donald Trump’s “America First” policy. Ant Financial is resubmitting its application for US review of its deal to buy the money transfer service, reports Reuters. Both the companies have refiled for clearance from the Committee on Foreign Investment in the US (CFIUS), an inter-department body which looks at acquisitions by foreign companies.
This attempt will be its third time as the maximum time of 75 days for assessing such applications nears completion.
In April, Ant Financial increased its bid to acquire MoneyGram by 36% and is now offering $18 per share in cash as opposed to its earlier bid of $13.25 per share. This pegged the deal at $1.2 billion. The companies had signed a definitive agreement in January for $880 million. In March, Kansas-based electronic payments company Euronet came forward with an unsolicited proposal to acquire all outstanding shares of MoneyGram Common Stock and Preferred Stock for $15.20.
The Euronet proposal is seen as more favorable to US lawmakers. Two members of US Congress – Kevin Yoder and Eddie Bernice Johnson – called on CFIUS for an investigation into Ant Financial’s proposal as it would allow Chinese access to the US financial infrastructure. They added that the proposed deal could also pose a significant threat to the US’ national security.
Equifax breach adds more scrutiny
The Equifax data breach earlier this month added further scrutiny on the Ant Financial-MoneyGram deal as a presidential advisory panel is considering a data theft by foreign countries as part of the review process, according to this New York Post report. The publication added that the panel used to focus on more traditional security issues.
In India, MoneyGram is an entity authorized by the Reserve Bank of India for accepting cross-border inward remittances. India is one of the large markets in the world for inward remittances.
Ant Financial’s merger with MoneyGram is also about being able to tap the 450 million registered users on Alipay (in China), and the 200 million users registered with Paytm (in India). Ant Financial initially purchased a 25% stake in One97 Communications, which operates Paytm, in February 2015. Paytm also raised an undisclosed amount in a round of funding from both Alibaba and Ant Financial in September 2015. At that time, Alibaba Group picked up a 20% stake in Paytm for about $680 million and lowered Ant Financial’s stake to 20%.