(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. 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. 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. “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. 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. 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. 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. 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. Per terms of the agreement, Ant has paid $30 million to MoneyGram for terminating the acquisition process.
Citing national security concerns, the U.S. government blocks Ant Financial's acquisition of MoneyGram.