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US authorities stopped the merger of MoneyGram and Alibaba’s unit Ant Financial

MoneyGramThe US authorities stopped the merger of MoneyGram and Alibaba’s unit Ant Financial. The Jack Ma’s company will pay 30 million USD to withdraw from the deal for buying MoneyGram for 18 USD per share. MoneyGram’s stock traded at a price of about 12 on Tuesday, down nearly 9%.

“The geopolitical situation has changed considerably since we first announced the proposed transaction with Ant Financial nearly an year ago”, said the CEO of MoneyGram, Alexander Holmes. “Although we did everything to work with the US government, it was now clear that it would not approve this merger”, added he.

Instead of merger, Alibaba and MoneyGram will form a “new strategic business cooperative” to expand their international digital payments services.

“Validating this new strategic partnership with MoneyGram will bring a global partner to our ecosystem”, said the President of Ant Financial International, Doug Feagin. “Although Ant Financial will not have a direct relationship through MoneyGram ownership, we can not wait to work with MoneyGram to make our platform even more accessible”, added he.

This is a big blow to the Chinese giant in e-commerce, which has global ambitions but faces the US government’s heavy hand in dealing with China. It is expected this month that US President Donald Trump will impose more severe penalties on companies that depend on trade with China.

Ant Financial is known for its dominant online payment service, Alipay, which resembles PayPal. The company was part of Alibaba but separated when Alibaba became public in 2014. Ant Financial itself was considered one of the top bidders for primary public offering, although it is claimed that in October 2017 the company decided to he waited for the implementation of this plan.

MoneyGram is the second largest money transfer company in the world. It has a long history of working with multinational money transfers – since the 1940s.