NEW YORK (Reuters Breakingviews) - Jack Ma made early friends with Donald Trump. He visited the U.S. president-elect almost a year ago to tout how his e-commerce giant, Alibaba, could help small American businesses create 1 million new jobs. Now, though, Ma’s Ant Financial offshoot has failed to secure approval for its $1.2 billion purchase of cash-transfer outfit MoneyGram International.
The Committee on Foreign Investment in the United States, which vets foreign acquirers, still wouldn’t approve the deal more than 11 months after Ant first bid, according to the companies, and they have scrapped it in favor of less concrete cooperation. News reports and remarks from U.S. lawmakers of both parties, including Senate Democratic leader Chuck Schumer, have suggested increasing resistance to such transactions, including concern that data on U.S. customers of MoneyGram could fall into Chinese government hands – especially with Beijing a shareholder in Ant.
It wasn’t exactly a totemic deal for Ant or for China, although its collapse and the $30 million break fee Ant is paying MoneyGram may dent Ma’s ego. Still, it would have been seen as something of a watershed for a successful upstart from the People’s Republic to get its hands on a piece of Uncle Sam’s payments infrastructure.
For Trump and China critics in his administration, that may have been the wrong message, especially when a similar deal in the other direction would surely come up against Beijing’s tight restrictions on foreign ownership in China’s financial system. Rather than opening the door – arguably the old American way of showing how things ought to be done – CFIUS this time kept it closed. If it’s a rebuke, it’s one that’s conveniently unlikely to provoke great resentment.
Even MoneyGram could salvage something from the situation if Euronet Worldwide, whose bid for MoneyGram last year was eventually trumped by Ant’s improved offer, is still interested.
Ma’s disappointed ambition may just be collateral damage in the more combative approach Washington is taking to engagement with China, via CFIUS and other channels. That could conceivably help force the country’s leaders to consider making life easier for foreign would-be acquirers. That seems a long shot, though. More likely it will endure simply as a symbol of Trump’s America First posture.
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