The Ministry of Foreign Affairs has called for a predictable environment for Chinese companies after Ant Financial Services Group failed on Tuesday to close a deal for U.S. money transfer company MoneyGram.
Ant Financial, the online financial services of Alibaba Group, and MoneyGram announced they would terminate the proposed merger deal due to failure to win approval from the Committee on Foreign Investment in the U.S. (CFIUS), according to a statement the Chinese company sent to the Global Times.
Chinese companies have encountered increased pressure when it comes to merger and acquisition (M&A) deals in the U.S. in recent years.
"The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago," Alex Holmes, CEO of MoneyGram, was quoted as saying in the statement.
MoneyGram and Ant had entered into an amended merger agreement under which Ant Financial was to have acquired all of the outstanding shares of MoneyGram for $18.00 each in cash.
Ant will pay MoneyGram a $30 million as termination fee.
China said on Wednesday that it hopes the U.S. can create a level playing field and a predictable environment for Chinese enterprises, Reuters reported.
The comment from Foreign Ministry Spokesperson Geng Shuang at a regular news conference was in response to a question from reporters about a U.S. government panel's rejection of Ant Financial's acquisition of MoneyGram over national security concerns, according to the media report.
"The failed deal reflects an overall tighter scrutiny of U.S. authorities over Chinese investors since last year," a source close to the deal told the Global Times on Wednesday.
Since President Donald Trump took office, the U.S. government has been overly defensive toward Chinese investment, which has hindered the "enthusiasm" of Chinese investors to do business in the U.S., the source noted.
For example, the Trump administration blocked the sale of Lattice Semiconductor Corp to Chinese-backed private equity firm Canyon Bridge Capital Partners for national security reasons in September 2017.
Two months later, Chinese private company CEFC China Energy withdrew from a $275 million deal with U.S. financial services firm Cowen Inc due to objections from the CFIUS.
The value of China's M&A deals in the U.S. dropped nearly 80 percent on a year-on-year basis in 2017, to $13.6 billion, according to a report Thomas Reuters sent to the Global Times in December 2017.
"The high-technology sector has been targeted amid the CFIUS reviews, as some technologies could be applied into sensitive areas such as military and telecommunications," Hao Junbo, a lawyer at Beijing-based Hao Law Firm, told the Global Times on Wednesday.
"Also, the U.S. government is likely to have a biased perspective on Chinese tech companies, especially when it is about the security of data and information, which has had a negative impact on M&A deals," he said.
Since 2015, Ant has been expanding actively overseas and served 36 countries and regions worldwide as of the end of 2017.
