Ant Financial walked away from its $1.2 billion bid to acquire US remittance company MoneyGram, citing problems with gaining approval from US foreign investment authorities.

The deal would have seen the China-based parent of Alipay gain a strong foothold in the North American market and was seen as a key part of its international expansion strategy.

In a joint statement, Ant Financial and MoneyGram said the two would now pursue a “strategic collaboration” – an agreement which would not require approval from Committee on Foreign Investment in the United States (CFIUS).

The two will partner to supply low cost money transfer services to markets including China, India, The Philippines and the US.

MoneyGram CEO Alex Holmes said the decision was disappointing, adding: “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 US government, it has now become clear that CFIUS will not approve this merger.”

To secure the proposed deal, Ant fought off competition from cashpoint technology company Euronet. During the tussle to win over MoneyGram shareholders, US-headquartered Euronet argued its bid offered a more certain path to closing as it required fewer regulatory sign-offs.

As a result of the deal falling through, Ant Financial paid MoneyGram a $30 million termination fee.