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A UK money transfer company has suddenly closed down its US operations to prevent its plan to buy 700 million pounds sterling by the Chinese company Ant Financial derailed by the US regulatory authorities.
WorldFirst has been in talks with Ant Financial since the end of last year as part of an agreement that would mark the largest expansion of Western markets by China's leading mobile payments provider.
In a message to customers this week, WorldFirst said its shareholders "have made the decision to shut down the US business" and will cease offering all services after February 20.
The decision was aimed at preventing the takeover of the UK company from becoming the second contract signed by Ant Financial in as many years blocked by US regulators for reasons of national security, according to two people informed of its decision.
Customers were informed that World First USA would be renamed Omega and would "subsequently operate independently of World First Group". The company declined to comment on the reasons for the sudden reversal of the strategy, which, according to one of the people, could result in heavy job losses among its US staff.
A rival fintech ruler, familiar with the move, said that it was "pretty extreme to shut down the entire company," but that this seemed to be the "only way to prevent the regulator American blocks the market ". [Ant Financial] treat. "
This decision comes almost exactly one year after Ant Financial, the digital payment subsidiary of Chinese online trading giant Alibaba, was forced to abandon a $ 1.2 billion proposal to buy MoneyGram, a privately owned company. American money transfer.
Ant Financial was forced to pay a termination fee of $ 30 million after failing to obtain support from the US Committee on Foreign Investment (Cfius). Politicians worried about the transmission of financial data from US citizens to a company owned in part by the Chinese government.
Relations between the United States and China further deteriorated over the next 12 months. A law pbaded in August will grant the Cfius extensive review powers over even modest purchases of minority stakes in US companies.
WorldFirst opened a subsidiary in the United States in 2011 and launched a major new product in the country last October. In the accounts submitted to Companies House the same month, the company said it was looking for more opportunities for international expansion.
Ant Financial declined to comment.
Even after the closure of its operations in the United States, an acquisition of WorldFirst would still be Antforce's first major success in the European market, while creating new businesses in countries such as Japan, India and Canada.
WorldFirst, founded in 2004 by former Citigroup bankers Jonathan Quin and Nick Robinson, provides international money transfers and foreign exchange services for businesses and individuals.
In 2013, they sold 40% of the capital to FTV Capital, the US private equity group. Former Deputy Governor of the Bank of England, David Clementi, who chairs the company since 2006, also holds a small stake.
The London-based company reported a turnover of £ 86m and pre-tax profit of £ 8.3m for 2017, the latest year for which data are available.
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