(Reuters) - Ant Financial’s plan to acquire U.S. money transfer company MoneyGram International Inc (MGI.O) collapsed on Tuesday after a U.S. government panel rejected it over national security concerns, the most high-profile Chinese deal to be torpedoed under the administration of U.S. President Donald Trump.

The $1.2 billion deal’s failure represents a blow for Jack Ma, the executive chairman of Chinese internet conglomerate Alibaba Group Holding Ltd (BABA.N), who owns Ant Financial together with Alibaba executives. He was looking to expand Ant Financial’s footprint amid fierce domestic competition from Chinese rival Tencent Holdings Ltd’s (0700.HK) WeChat payment platform.

Ma, a Chinese citizen who appears frequently with leaders from the highest echelons of the Communist Party, had promised Trump in a meeting a year ago that he would create 1 million U.S. jobs.

MoneyGram shares fell 8.5 percent in after-market trading.

The companies decided to terminate their deal after the Committee on Foreign Investment in the United States (CFIUS) rejected their proposals to mitigate concerns over the safety of data that can be used to identify U.S. citizens, according to sources familiar with the confidential discussions.

“Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger,” MoneyGram Chief Executive Alex Holmes said in a statement on Tuesday.

The U.S. government has toughened its stance on the sale of companies to Chinese entities, at a time when Trump is trying to put pressure on China to help tackle North Korea’s nuclear ambitions and be more accommodative on trade and foreign exchange issues.

Related Coverage Ant's MoneyGram failure casts pall over Chinese dealmaking

The MoneyGram deal is the latest in a string of Chinese acquisitions of U.S. companies that have failed to clear CFIUS, including the $1.3 billion purchase by China-backed buyout fund Canyon Bridge Capital Partners LLC of U.S. chip maker Lattice Semiconductor Corp (LSCC.O).

In November, China Oceanwide Holdings Group Co Ltd (0715.HK) and Genworth Financial Inc (GNW.N) extended a deadline to April 1 for the Chinese group’s planned $2.7 billion takeover of the U.S. life insurer.

Asked on Wednesday for Beijing’s view on the deal’s rejection, a Chinese Foreign Ministry spokesman said cooperation on economic and trade matters was of mutual benefit.

“We hope the U.S. can create a fair and predictable environment for Chinese enterprises to invest and start up businesses,” the spokesman said.

However, commentary published after the deal’s collapse by official news agency Xinhua went further, describing a fading bonhomie between the two countries, with the United States “stuck in a zero-sum mentality”.

“China and the United States are about to ride a bumpy journey in trade in 2018 if the U.S. government goes its own way, and retaliatory measures by China could be on the table,” it said.

A MoneyGram kiosk is seen in New York, U.S. January 3, 2018. REUTERS/Shannon Stapleton

FINANCIAL SERVICES DEALS

The MoneyGram deal’s demise is also the latest example of how CFIUS’ focus on cyber security and the integrity of personal data is prompting it to block deals in sectors not traditionally associated with national security, such as financial services.

The U.S. Treasury said it is prohibited by statute from disclosing information filed with CFIUS and declined to comment on the MoneyGram deal.

Other U.S. financial services deals by Chinese firms are waiting for approval from CFIUS, including HNA Group Co’s acquisition of hedge fund-of-funds firm SkyBridge Capital LLC from Anthony Scaramucci, the Trump administration’s former communications director.

SkyBridge and HNA did not immediately respond to requests for comment.

Dallas-based MoneyGram has approximately 350,000 remittance locations in more than 200 countries. Ant Financial was looking to take over MoneyGram not so much for its U.S. presence but to expand in growing markets outside of China.

Ant Financial and MoneyGram said they will now explore and develop initiatives to work together in remittance and digital payments in China, India, the Philippines and other Asian markets, as well as in the United States. This cooperation will take the form of commercial agreements, one of the sources said.

Any arrangements reached by Ant Financial and MoneyGram that do not involve a transaction would not be subject to review by CFIUS.

“What is more likely to happen at this point is that MoneyGram will sell to another company, and one company that has shown interest in the past is Euronet,” said Gil Luria, an equity analyst at D.A. Davidson & Co.

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Ant Financial agreed an $18 per share all-cash deal to acquire MoneyGram in April, seeing off competition from U.S.-based Euronet Worldwide Inc (EEFT.O), which had made an unsolicited offer for MoneyGram and openly lobbied U.S lawmakers, saying Ant’s proposal created a national security risk.

“Euronet continues to believe there is compelling commercial logic to a combination between Euronet and MoneyGram. However, significant developments have been disclosed by MoneyGram since Euronet’s offer, and Euronet has not conducted any evaluation of the business in that time. While we continue to view a transaction with MoneyGram as logical, there is no guarantee any offer will be made or any transaction will ultimately occur,” Euronet said in a statement.

Ant Financial said it paid MoneyGram a $30 million termination fee for the deal’s collapse.</s>(Reuters) — A U.S. government panel rejected Ant Financial’s acquisition of U.S. money transfer company MoneyGram International over national security concerns, the companies said on Tuesday, the most high-profile Chinese deal to be torpedoed under the administration of U.S. President Donald Trump.

The $1.2 billion deal’s collapse represents a blow for Jack Ma, the executive chairman of Chinese internet conglomerate Alibaba Group Holding, who owns Ant Financial together with Alibaba executives. He was looking to expand Ant Financial’s footprint amid fierce domestic competition from Chinese rival Tencent Holdings’ WeChat payment platform.

Ma, a Chinese citizen who appears frequently with leaders from the highest echelons of the Communist Party, had promised Trump in a meeting a year ago that he would create 1 million U.S. jobs.

MoneyGram shares were down 8.5 percent at $12.06 in after-market trading.

The companies decided to terminate their deal after the Committee on Foreign Investment in the United States (CFIUS) rejected their proposals to mitigate concerns over the safety of data that can be used to identify U.S. citizens, according to sources familiar with the confidential discussions.

“Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger,” MoneyGram Chief Executive Alex Holmes said in a statement.

A standard CFIUS review lasts up to 75 days, and the companies had gone through the process three times in order to address concerns. Additional security measures and protocols that the companies suggested failed to reassure CFIUS, the sources said.

The U.S. Treasury said it is prohibited by statute from disclosing information filed with CFIUS and declined to comment on the MoneyGram deal.

The U.S. government has toughened its stance on the sale of companies to Chinese entities, at a time when Trump is trying to put pressure on China to help tackle North Korea’s nuclear ambitions and be more accommodative on trade and foreign exchange issues.

The MoneyGram deal is the latest in a string of Chinese acquisitions of U.S. companies that have failed to clear CFIUS. They include China-backed buyout fund Canyon Bridge Capital Partners LLC’s $1.3 billion acquisition of U.S. chip maker Lattice Semiconductor, China Oceanwide Holdings Group’s $2.7 billion acquisition of U.S. life insurer Genworth Financial Inc and Chinese buyout firm Orient Hontai Capital’s $1.4 billion acquisition of U.S. mobile marketing firm AppLovin.

The MoneyGram’s deal demise is also the latest example of how CFIUS’ focus on cyber security and the integrity of personal data is prompting it to block deals in sectors not traditionally associated with national security, such as financial services.

Other U.S. financial services deals by Chinese firms are waiting for approval from CFIUS, including HNA Group Co’s acquisition of hedge fund-of-funds firm SkyBridge Capital LLC from Anthony Scaramucci, the Trump administration’s former communications director.

Skybridge and HNA did not immediately respond to requests for comment.

Dallas-based MoneyGram has approximately 350,000 remittance locations in more than 200 countries. Ant Financial was looking to take over MoneyGram not so much for its U.S. presence but to expand in growing markets outside of China.

Ant Financial and MoneyGram said they will now explore and develop initiatives to work together in remittance and digital payments in China, India, the Philippines and other Asian markets, as well as in the United States. This cooperation will take the form of commercial agreements, one of the sources said.

Any arrangements reached by Ant Financial and MoneyGram that do not involve a transaction would not be subject to review by CFIUS.

Some U.S. lawmakers, including Republican Senators Pat Roberts and Jerry Moran, had written to Treasury Secretary Steven Mnuchin, who also serves as chairman of CFIUS, to express concern that Ant Financial’s acquisition of MoneyGram could pose national security threats, arguing that the information of U.S. citizens, including military personnel, could be compromised.

Ant Financial had argued that MoneyGram’s data infrastructure would remain in the United States, with personal information encrypted or held in secure facilities on U.S. soil. It had also pointed to existing U.S. regulations that call for such protections.

CFIUS had approved a previous deal by Ant Financial, its acquisition in 2016 of Kansas City-based EyeVerify, which designs a mobile eye verification technology.

“What is more likely to happen at this point is that MoneyGram will sell to another company, and one company that has shown interest in the past is Euronet,” said Gil Luria, an equity analyst at D.A. Davidson & Co.

Ant Financial clinched an $18 per share all-cash deal to acquire MoneyGram in April, seeing off competition from U.S.-based Euronet Worldwide, which had made an unsolicited offer for MoneyGram and openly lobbied U.S lawmakers, saying Ant’s proposal created a national security risk.

“Euronet continues to believe there is compelling commercial logic to a combination between Euronet and MoneyGram. However, significant developments have been disclosed by MoneyGram since Euronet’s offer, and Euronet has not conducted any evaluation of the business in that time. While we continue to view a transaction with MoneyGram as logical, there is no guarantee any offer will be made or any transaction will ultimately occur,” Euronet said in a statement.

Ant Financial said it paid MoneyGram a $30 million termination fee for the deal’s collapse.</s>Jan 2 (Reuters) - A U.S. government panel rejected Ant Financial's acquisition of MoneyGram International Inc over national security concerns, the companies said on Tuesday, the most high-profile Chinese deal to be torpedoed under the administration of U.S. President Donald Trump.

The $1.2 billion deal's collapse represents a blow for Jack Ma, the executive chairman of Chinese internet conglomerate Alibaba Group Holding Ltd, who owns Ant Financial together with Alibaba executives. He was looking to expand Ant Financial's footprint amid fierce domestic competition from Chinese rival Tencent Holdings Ltd's WeChat payment platform.

Ma, a Chinese citizen who appears frequently with leaders from the highest echelons of the Communist Party, had promised Trump in a meeting a year ago that he would create 1 million U.S. jobs.

MoneyGram shares were down 8.5 percent at $12.06 in after-market trading.

The companies decided to terminate their deal after the Committee on Foreign Investment in the United States (CFIUS) rejected their proposals to mitigate concerns over the safety of data that can be used to identify U.S. citizens, according to sources familiar with the confidential discussions.

"Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger," MoneyGram Chief Executive Alex Holmes said in a statement.

A standard CFIUS review lasts up to 75 days, and the companies had gone through the process three times in order to address concerns. Additional security measures and protocols that the companies suggested failed to reassure CFIUS, the sources said.

"U.S. Treasury is prohibited by statute from publicly disclosing information filed with CFIUS. CFIUS reviews focus on national security concerns and Treasury takes the role as chair of CFIUS very seriously, to ensure that CFIUS identifies and addresses any national security concerns posed by such foreign investment," a U.S. Treasury spokesman said.

The U.S. government has toughened its stance on the sale of companies to Chinese entities, at a time when Trump is trying to put pressure on China to help tackle North Korea's nuclear ambitions and be more accommodative on trade and foreign exchange issues.

The MoneyGram deal is the latest in a string of Chinese acquisitions of U.S. companies that have failed to clear CFIUS. They include China-backed buyout fund Canyon Bridge Capital Partners LLC's $1.3 billion acquisition of U.S. chip maker Lattice Semiconductor Corp, China Oceanwide Holdings Group Co Ltd's $2.7 billion acquisition of U.S. life insurer Genworth Financial Inc and Chinese buyout firm Orient Hontai Capital's $1.4 billion acquisition of U.S. mobile marketing firm AppLovin.

The MoneyGram's deal demise is also the latest example of how CFIUS' focus on cyber security and the integrity of personal data is prompting it to block deals in sectors not traditionally associated with national security, such as financial services.

Other U.S. financial services deals by Chinese firms are waiting for approval from CFIUS, including HNA Group Co's acquisition of hedge fund-of-funds firm SkyBridge Capital LLC from Anthony Scaramucci, the Trump administration´s former communications director.

Skybridge and HNA did not immediately respond to requests for comment on what impact they believed the blocked MoneyGram deal would have on them.

Dallas-based MoneyGram has approximately 350,000 remittance locations in more than 200 countries. Ant Financial was looking to take over MoneyGram not so much for its U.S. presence but to expand in growing markets outside of China.

Ant Financial and MoneyGram said they will now explore and develop initiatives to work together in remittance and digital payments in China, India, the Philippines and other Asian markets, as well as in the United States. This cooperation will take the form of commercial agreements, one of the sources said.

CFIUS only reviews mergers and acquisitions, so any arrangements reached by Ant Financial and MoneyGram that do not involve a transaction would not be subject to its review.

"What is more likely to happen at this point is that MoneyGram will sell to another company, and one company that has shown interest in the past is Euronet," said Gil Luria, an equity analyst at D.A. Davidson & Co.

Ant Financial clinched an $18 per share all-cash deal to acquire MoneyGram in April, seeing off competition from U.S.-based Euronet Worldwide Inc, which had made an unsolicited offer for MoneyGram and openly lobbied U.S lawmakers, saying Ant's proposal created a national security risk.

A Euronet spokesman did not immediately respond to a question about whether Euronet would return with a new offer for MoneyGram.

Ant Financial said it paid MoneyGram a $30 million termination fee for the deal's collapse.</s>New York — A US government panel rejected Ant Financial’s acquisition of US money transfer company MoneyGram International over national security concerns, the companies said on Tuesday.

This is the most high-profile Chinese deal to be torpedoed under the administration of US President Donald Trump.

The collapse of the $1.2bn deal represents a blow for Jack Ma, the executive chairman of Chinese internet conglomerate Alibaba Group Holding, who owns Ant Financial together with Alibaba executives.

He was hoping to expand Ant Financial’s footprint amid fierce domestic competition from Chinese rival Tencent Holdings’ WeChat payment platform.

Ma, a Chinese citizen who appears frequently with leaders from the highest echelons of the Communist Party, had promised Trump in a meeting a year ago that he would create 1-million US jobs.

MoneyGram shares were down 8.5% at $12.06 in after-market trading.

The companies decided to terminate their deal after the Committee on Foreign Investment in the US (CFIUS) rejected their proposals to mitigate concerns over the safety of data that can be used to identify US citizens, according to sources familiar with the confidential discussions.

"Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger," MoneyGram CEO Alex Holmes said.

A standard CFIUS review lasts up to 75 days and the companies went through the process three times to address concerns.

The additional security measures and protocols that the companies suggested failed to reassure CFIUS, the sources said.

The US Treasury said it was prohibited by statute from disclosing information filed with CFIUS and declined to comment on the MoneyGram deal.

The US government has toughened its stance on the sale of companies to Chinese entities, at a time when Trump is trying to put pressure on China to help tackle North Korea’s nuclear ambitions and to be more accommodative on trade and foreign exchange issues.

The MoneyGram deal is the latest in a string of Chinese acquisitions of US companies that have failed to clear CFIUS reviews.

They include China-backed buy-out fund Canyon Bridge Capital Partners’ $1.3bn acquisition of US chip maker Lattice Semiconductor; and Chinese buy-out firm Orient Hontai Capital’s $1.4bn acquisition of US mobile marketing firm AppLovin.

In November, China Oceanwide Holdings Group and Genworth Financial extended a deadline to April 1 for the Chinese group’s planned $2.7bn takeover of the US life insurer.

The demise of the MoneyGram deal is also the latest example of how CFIUS’s focus on cyber security and the integrity of personal data is prompting it to block deals in sectors not traditionally associated with national security, such as financial services.

Other US financial services deals by Chinese companies awaiting CFIUS approval include HNA Group’s acquisition of hedge fund-of-funds firm SkyBridge Capital from Anthony Scaramucci, the Trump administration’s former communications director.

SkyBridge and HNA did not immediately respond to requests for comment.

Dallas-based MoneyGram has about 350,000 remittance locations in more than 200 countries.

Ant Financial was looking to take over MoneyGram not so much for its US presence but to expand in growing markets outside China.

Ant Financial and MoneyGram said they would now explore and develop initiatives to work together in remittance and digital payments in China, India, the Philippines and other Asian markets, as well as in the US.

This co-operation would take the form of commercial agreements, one of the sources said.

Any arrangements reached by Ant Financial and MoneyGram that do not involve a transaction would not be subject to review by CFIUS.

Some US legislators, including Republican senators Pat Roberts and Jerry Moran, had written to Treasury Secretary Steven Mnuchin, who also serves as chairman of CFIUS, to express concern that Ant Financial’s acquisition of MoneyGram could pose national security threats, arguing that the information of US citizens, including military personnel, could be compromised.

Ant Financial had argued that MoneyGram’s data infrastructure would remain in the US, with personal information encrypted or held in secure facilities on US soil.

It had also pointed to existing US regulations that call for such protections.

Ant Financial clinched an $18-per-share all-cash deal to acquire MoneyGram in April, seeing off competition from US-based Euronet Worldwide, which had made an unsolicited offer for MoneyGram and openly lobbied US legislators, saying Ant’s proposal created a national security risk.

Ant Financial said it paid MoneyGram a $30m termination fee for the deal’s collapse.</s>Donald Trump has rejected the $1.2bn acquisition of Texan money transfer company Moneygram by China's Ant Financial citing national security concerns. Moneygram and Ant Financial, which is as owned by Alibaba boss Jack Ma, terminated their deals after the committee on foreign investment in the US (CFIUS) denied their proposals to quell concerns over the safety of US citizens data. "Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not ...</s>The proposed acquisition of global payment service MoneyGram by Alibaba’s Ant Financial is off after the U.S. government blocked the $1.2 billion deal.

Ant Financial, the Alibaba affiliate which controls Alipay — China’s top mobile wallet — and other financial services, announced a deal to buy Nasdaq-listed MoneyGram in April 2017 after it beat off a rival bid from Euronet. Ant initially bid for MoneyGram in January 2017 as a means to develop its cross-border payment network into the U.S., and major corridors including India and the Philippines, but instead it will “explore and develop initiatives” to collaborate with MoneyGram’s business.

“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago. Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS [Committee on Foreign Investment in the United States] will not approve this merger,” MoneyGram CEO Alex Holmes said in a statement.

“Establishing this new strategic cooperation with MoneyGram will add a partner with global remittance capabilities to our ecosystem and, while Ant Financial won’t have a direct ownership relationship with MoneyGram, we look forward to working closely with the MoneyGram team to make our platform even more accessible – particularly to unbanked and underserved communities globally – and create even better experiences for our customers,” added Doug Feagin, President of Ant Financial International.

Per terms of the agreement, Ant has paid $30 million to MoneyGram for terminating the acquisition process.

MoneyGram’s share price dropped by around 10 percent to $12.02 on the news, before recovering to around $12.40 in out-of-hours trading at the time of writing.

The collapse of the deal is a huge blow to Ant, which spent much of 2017 developing its mobile payment network beyond China and into Southeast Asia, India, Korea, Japan and other parts of Asia with a series of partnerships and investments. MoneyGram not only added the U.S. to that strategy, but it had the potential to give Ant a physical network of cross-border offices and a much large slice of the global cross-payment industry. But now it is not to be, and it will be interesting to see what approach Ant — which is hotly-tipped to go public in a massive IPO — will take to fill the void beyond this new “strategic business cooperation” with MoneyGram.

The collapse of the deal marks a second China-led acquisition of a U.S. tech company to have failed during U.S. President Trump’s tenure. Back in September, a private equity group was blocked from purchasing Lattice Semiconductor due to potential security risks. Prior to the Trump administration, just three deals had been blocked over the past 27 years.</s>The demise of $1.2 billion deal suggests U.S. officials are concerned about the data security implications of takeovers by Chinese investors.

The proposed $1.2 billion acquisition of MoneyGram by Chinese electronic payments company Ant Financial has collapsed, a setback that may reflect a broadening of the Trump administration’s national security concerns.

MoneyGram and Ant, an affiliate of Chinese internet group Alibaba, jointly announced Wednesday that they had been unable to gain the required approval for the deal from the Committee on Foreign Investment in the United States “despite extensive efforts to address the Committee’s concerns.”

CFIUS, an inter-agency body that reviews acquisitions of U.S. companies by overseas entities for security implications, had jurisdiction over the deal because Chinese state-backed entities and funds own 15% of Ant.

“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” MoneyGram CEO Alex Holmes. “Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger.”

According to Reuters, the committee’s concerns centered on the safety of financial data that could be used to identify U.S. citizens. The deal would have given Ant access to 2.4 million bank and mobile accounts.

“Data is a national security issue,” a U.S.-based mergers and acquisitions lawyer told The Financial Times. “The more information [Chinese entities] have on U.S. citizens, the more they could wreak havoc on someone’s personal finances.”

Chinese companies last year invested more than $130 billion in the U.S., up from just $21.5 billion in 2012, according to the Rhodium Group research firm. But the MoneyGram deal is the latest in a string of Chinese acquisitions that have failed to clear CFIUS, including the $1.3 billion purchase by Canyon Bridge Capital Partners of chip maker Lattice Semiconductor.

Alibaba founder Jack Ma was hoping to expand Ant’s global footprint amid fierce domestic competition from Chinese rival Tencent Holdings’ WeChat payment platform. He promised President Trump in a meeting a year ago that he would create 1 million U.S. jobs.

“After nearly a year of deliberations, CFIUS has scuppered [Ma’s] plans — and delivered a bleak precedent for any future tilts at U.S. assets,” the FT said.</s>US officials have effectively killed a Chinese company’s $1.2 billion plan to buy MoneyGram, the money transfer company, signaling the Trump administration’s growing scepticism of Chinese purchases of US companies and of broader business ties between the two economic powers.

MoneyGram and Ant Financial, the Chinese electronic payments company, said they had canceled the deal after failing to win approval from a Washington panel that reviews foreign purchases of US companies.

“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” the chief executive of MoneyGram, Alex Holmes, said.

The deal failed despite a charm offensive by Jack Ma, the Chinese internet tycoon who controls Ant Financial. Shortly after Donald Trump won the 2016 election, Ma famously stood with the president-elect in Trump Tower in New York and pledged that his e-commerce empire would help create 1 million American jobs.

That push apparently could not compete with Trump’s concerns about Chinese money and dealmakers, and with his administration’s concerns about Chinese acquisitions of American know-how. The administration is finishing an investigation into Chinese theft of intellectual property owned by U.S. companies, which could result in tariffs on Chinese imports or further restrictions on Chinese investment.

The Trump administration could soon take other steps to stop what it considers unfair Chinese trade practices in China in areas like solar panels. For now, the collapse of the MoneyGram deal could spell trouble for other Chinese companies considering major acquisitions.

The effort by Ant Financial, the payments affiliate of the internet giant Alibaba, was seen as a test of the Trump administration’s political and regulatory approach to China.

Trump and other politicians have long criticised Chinese trade practices and their impact on traditional, heavy industries in the United States, such as steel. But officials and lawmakers of both parties have grown increasingly concerned with Chinese purchases in high-tech areas, like semiconductors and artificial intelligence. China - a country that has grown by leaps and bounds in expertise in recent years - has aggressively funded development of next-generation technology in ways that have alarmed some foreign governments and businesses.

That has led to calls to tighten reviews of Chinese purchases of US assets. Chinese investment surged to more than $130 billion in 2017 from just $21.5 billion in 2012, according to Rhodium Group, a research firm. In 2018, bankers say they expect another big year of investment, targeted more at sectors considered important to future economic growth like high technology and renewable energy.

Lawmakers from both parties have introduced legislation calling for greater scrutiny of Chinese investments in the United States. They are pushing for an expansion of the Committee on Foreign Investment in the United States, or CFIUS, the multiagency panel that reviews foreign deals for potential threats to national security and that rejected the MoneyGram-Ant Financial plan.

In 2016, US concerns over China’s interest in microchips scotched some Chinese purchases, and last year Trump blocked the purchase of Lattice Semiconductors by a group with links to China. The deal’s demise also illustrates rising concerns in both the United States and China over sensitive personal data.

In buying a large-scale money-transfer company like MoneyGram, Ant Financial would have had access to a large number of records of financial flows within the United States. That fact, combined with close ties to China’s government, could have created security problems. For example, the flow of funds could point to possible espionage targets in the United States military who face financial difficulties.

Ant Financial has disputed such claims, saying that consumer data would continue to be stored in the United States. Critics of the deal also asked whether Ant Financial would be able to properly police transactions linked to money laundering or terrorism. Ant Financial had said the deal would give MoneyGram greater resources to toughen its efforts to prevent money laundering.

China, as well, has taken steps to stanch American companies’ access to data. A new cybersecurity law there forces American companies to keep data on Chinese citizens stored within China, while Chinese state-media have run public service announcements warning about private data collected by Apple’s iPhones.

“Data flows out of and into China are an increasing source of suspicion in the bilateral relationship,” said Adam Segal, a senior fellow at the Council on Foreign Relations in New York. He said Washington was in the “paradoxical position” of criticizing the new Chinese law while opposing deals like MoneyGram because of national security concerns.

For Ant Financial, the decision is a setback to its efforts to extend its strong position in online payments abroad. Ant Financial, which grew out of the Chinese payment service Alipay, wanted to buy MoneyGram to accelerate its global expansion. In the past several years, the company has pushed into India, South Korea and Thailand.

Ma, the Chinese internet tycoon, has worked hard to put a positive face on his companies in the United States. He also controls the Alibaba Group, China’s largest internet company, and last year he hosted a conference in Detroit aimed at helping American businesses sell on Alibaba’s e-commerce sites.

Amid the heightened sensitivity to overseas purchases, MoneyGram and Ant Financial said it was clear that CFIUS would not approve the deal, despite their efforts to quell concerns.</s>For now, the collapse of the MoneyGram deal could spell trouble for other Chinese companies considering major acquisitions. The effort by Ant Financial, the payments affiliate of the internet giant Alibaba, was seen as a test of the Trump administration’s political and regulatory approach to China.

Other deals under review include the sale of SkyBridge Capital — an investment firm founded by Anthony Scaramucci, an ally of Mr. Trump — to an arm of HNA Group, a Chinese conglomerate.

The collapse of the deal offers the latest sign of a shift — one that began during the end of the Obama administration — over how Washington treats Chinese acquisitions of American assets.

Mr. Trump and other politicians have long criticized Chinese trade practices and their impact on traditional, heavy industries in the United States, such as steel. But officials and lawmakers of both parties have grown increasingly concerned with Chinese purchases in high-tech areas, like semiconductors and artificial intelligence. China — a country that has grown by leaps and bounds in expertise in recent years — has aggressively funded development of next-generation technology in ways that have alarmed some foreign governments and businesses.

That has led to calls to tighten reviews of Chinese purchases of American assets. Chinese investment surged to more than $130 billion in 2017 from just $21.5 billion in 2012, according to Rhodium Group, a research firm. In 2018, bankers say they expect another big year of investment, targeted more at sectors considered important to future economic growth like high technology and renewable energy.

Lawmakers from both parties have introduced legislation calling for greater scrutiny of Chinese investments in the United States. They are pushing for an expansion of the Committee on Foreign Investment in the United States, or Cfius, the multiagency panel that reviews foreign deals for potential threats to national security and that rejected the MoneyGram-Ant Financial plan.

In 2016, American concerns over China’s interest in microchips scotched some Chinese purchases, and last year Mr. Trump blocked the purchase of Lattice Semiconductors by a group with links to China.

The deal’s demise also illustrates rising concerns in both the United States and China over sensitive personal data. In buying a large-scale money-transfer company like MoneyGram, Ant Financial would have had access to a large number of records of financial flows within the United States. That fact, combined with close ties to China’s government, could have created security problems. For example, the flow of funds could point to possible espionage targets in the United States military who face financial difficulties.

Ant Financial has disputed such claims, saying that consumer data would continue to be stored in the United States.

Critics of the deal also asked whether Ant Financial would be able to properly police transactions linked to money laundering or terrorism. Ant Financial had said the deal would give MoneyGram greater resources to toughen its efforts to prevent money laundering.

China, as well, has taken steps to stanch American company access to data. A new cybersecurity law there forces American companies to keep data on Chinese citizens stored within China, while Chinese state-media have run public service announcements warning about private data collected by Apple’s iPhones.

“Data flows out of and into China are an increasing source of suspicion in the bilateral relationship,” said Adam Segal, a senior fellow at the Council on Foreign Relations in New York. He said Washington was in the “paradoxical position” of criticizing the new Chinese law while opposing deals like MoneyGram because of national security concerns.

For Ant Financial, the decision is a setback to its efforts to extend its strong position in online payments abroad. Ant Financial, which grew out of the Chinese payment service Alipay, wanted to buy MoneyGram to accelerate its global expansion. In the past several years, the company has pushed into India, South Korea and Thailand.

Mr. Ma, the Chinese internet tycoon, has worked hard to put a positive face on his companies in the United States. He also controls the Alibaba Group, China’s largest internet company, and last year he hosted a conference in Detroit aimed at helping American businesses sell on Alibaba’s e-commerce sites.

Amid the heightened sensitivity to overseas purchases, MoneyGram and Ant Financial said it was clear that Cfius would not approve the deal, despite their efforts to quell concerns.</s>WASHINGTON — MoneyGram is calling off its merger with a Chinese financial services giant after failing to get approval from the U.S. government.

“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” MoneyGram CEO Alex Holmes said in a statement Tuesday.

The deal between Ant Financial, an affiliate of Jack Ma’s tech company Alibaba, and the American money transfer service was first announced in January 2017. Ant Financial originally agreed to pay $880 million, but upped its offer to $1.2 billion in April after a U.S. company made an unsolicited bid on MoneyGram.

The agreement had been under review by the Committee on Foreign Investment in the United States, the inter-agency body that vets deals that could give a foreign investor control of a U.S. business.

“Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger,” Holmes said.

The Treasury Department, which chairs CFIUS, said the agency is “prohibited by statute from publicly disclosing information filed with CFIUS.”

“CFIUS reviews focus on national security concerns and Treasury takes the role as Chair of CFIUS very seriously, to ensure that CFIUS identifies and addresses any national security concerns posed by such foreign investment,” a spokesperson said in an emailed statement.

Ant Financial’s proposed takeover of MoneyGram had been contentious among some lawmakers.

In a Wall Street Journal op-ed published last February, Congressmen Robert Pittenger and Chris Smith voiced major concerns.

“Should this transaction be approved, the Chinese government would gain significant access to, and information on, financial markets and specific international consumer money flows,” they wrote. “We cannot afford to ignore well-coordinated Chinese investments that target our critical and financial infrastructure,” they added.

The Chinese government holds a 15% stake in Ant Financial, according to the congressmen, who are both Republicans. However, a spokesperson for Ant Financial said the company is “neither owned nor controlled by the Chinese government.”

“Similar to U.S. government pension funds investing in American companies, a small number of Chinese government investment funds have minority stakes in Ant Financial,” the company said. “These are all passive, non-controlling stakes, and none of these investors participate in management or have board representation.”

The acquisition would have been Ant Financial’s first major move to expand its footprint overseas. MoneyGram, which has over 650 million users worldwide, competes with Western Union for cross-border money transfers to countries like Mexico.

Ant Financial paid MoneyGram a $30 million fee to terminate the deal.

President Trump has made getting tough on China a cornerstone of his foreign and trade policy, though he hasn’t yet followed through on campaign promises like labeling the country a currency manipulator. Experts have said tensions may escalate in 2018.
Citing national security concerns, the U.S. government blocks Ant Financial's acquisition of MoneyGram.