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Alibaba’s Ant Financial Applies Lesson to Save WorldFirst Deal

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WorldFirst shuts US business

Alibaba’s (BABA) Ant Financial learned a lesson when the United States blocked it from acquiring MoneyGram (MGI) a year ago. Ant now wants to buy British money transfer and currency exchange provider WorldFirst and it looks like it wants to bypass American regulators. WorldFirst is headquartered in London and operates offices around the world, including in the United States. According to a report from Financial Times, WorldFirst has closed its US operations in an apparent attempt to save its deal with Ant.

Without operations in the United States, WorldFirst and Ant wouldn’t require clearance from American regulators to be able to merge as they seek to do.

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Once bitten, twice shy

About a year ago, American regulators blocked Ant from acquiring MoneyGram on national security grounds. Ant had sought to take over MoneyGram for about $1.2 billion. It had even raised its bid from about $880 million originally after Euronet Worldwide (EEFT) challenged it with a $955 million competing bid for MoneyGram.

Once bitten, twice shy. With the setback due to American regulators still fresh in its mind, Ant may want to avoid going through them again if possible to save the WorldFirst deal. The collapse of the MoneyGram deal was not only a blow to Ant’s global expansion efforts, but it also left it with a $30 million bill in breakup fees payable to MoneyGram.

Ant in global expansion drive

Ant provides a range of financial services including issuing business and consumer loans and facilitating mobile payments. Ant is on a global expansion drive, which comes as Amazon (AMZN) is also exploring rolling out its digital financial services more broadly, according to a report from the Wall Street Journal. Ant’s Alipay mobile payment service is available in some 110 countries. PayPal (PYPL) operates in more than 200 countries.

Alibaba is entitled to a cut of Ant’s profits. However, the company didn’t get anything in the December quarter, though that was still better than the $132 million loss Alibaba suffered in the September quarter because of its arrangement with Ant.

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