U.S. lawmakers are spinning up concerns about Ant Financial’s $1.2 billion takeover of MoneyGram.
Legislators are openly speculating as to whether or not acquisition of the U.S. cash-transfer group by an affiliate of China’s Alibaba and the Chinese government poses a national security threat.
Specifically, Republican senators Pat Roberts and Jerry Moran have written Steven Mnuchin, U.S. Treasury Secretary, with concerns that allowing the merger to happen could be a danger to America’s financial infrastructure.
That opposition is problematic to Ant Financial — and for Jack Ma, the firm’s leader (as well as the chairman and CEO of Alibaba), who has worked hard to position Ant for U.S. expansion. Ma, as of last week, had promised to bring 1 million U.S. small businesses to Alibaba’s platform in an effort to boost U.S. exports to China. Ma has also claimed he will create 1 million U.S. jobs, a move lauded by U.S. President Donald Trump.
Despite those efforts, lawmakers across party lines are now sharply demanding an extra close look at the deal by the Committee on Foreign Investments in the U.S. CFIUS is expected to issue a verdict on the transaction by midsummer.
Roberts said the Chinese takeover of MoneyGram “should trigger no less concern than if a Chinese company were seeking to take control of a large, well-known bank.”
He added that the deal “highlights the inequity between U.S. and Chinese companies when it comes to international acquisitions . . . there is virtually no chance that a US financial services company would be permitted to acquire a Chinese [rival]”.
Notably, the two most recent objectors to the deal are from Kansas — home state of Euronet, a rival money transfer company that failed to gatecrash Ant’s deal with MoneyGram.
Alex Holmes, chief executive of MoneyGram, told the FT that allegations that Ant’s takeover posed a threat to US national security or a risk to the safety of US citizens’ personal data were untrue.
He also added that the recent trade deal between the US and China, where Beijing pledged access for rating agencies and credit card companies, indicated that the Trump administration welcomed Chinese investment in America.
“Investment reciprocity between China and the US is not an issue in this transaction. The money transfer industry in China is open to foreign competition, and MoneyGram already has a robust business in China as do other money transfer companies,” Mr Holmes said.
“Thanks to President Trump’s engagement with China, our two countries are on track to building an even stronger economic relationship. Investments in the US, like the one Ant will make in our company, are critical to creating new jobs and increasing economic growth in our country.”