Alibaba's Ant Financial abandons $1.2bn MoneyGram takeover as US authorities refuse to back deal

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The block puts Jack Ma's plans to create a million US jobs on hold (Source: Getty)

The proposed $1.2bn (£880m) sale of US company MoneyGram to a China-based group has been blocked.

Ant Financial, the digital payments arm of Alibaba, had reached an agreement to buy MoneyGram after beating out competition from US firm Euronet.

But government regulators on Committee on Foreign Investment in the United States (CFIUS) have refused to support the takeover, leading the two companies to terminate their agreement.

In a statement released today by Ant Financial and MoneyGram, the firms said they planned to work together on new strategic initiatives instead.

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"While we are disappointed by this outcome, we are confident in the future of MoneyGram and are excited about the benefits of our future cooperation with Ant Financial," said MoneyGram chief executive Alex Holmes. "By increasing access to digitally enabled customer wallets on the receiving side, we will be able to reduce distribution costs and improve transaction processing time."

The collapse of the deal is one of the highest-profile interventions since President Donald Trump vowed to take a tougher stance on trade with China. It follows the blocking of Canyon Bridge Capital's $1.3bn agreement for Apple supplier Lattice Semiconductor Group.

Alibaba's founder Jack Ma has previously met with the President and promised to create a million US jobs. But Trump promised on his campaign trail to be tougher with China in order to narrow the US's widening trade deficit with the country.

This rhetoric has returned more strongly in the last few days after he accused China of allowing oil to go into North Korea.

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