Shares of MoneyGram International Inc. rose 6.8 percent Wednesday, after Euronet Worldwide Inc. said that it may renew a takeover bid for its bigger rival.
Talk of takeover lifts MoneyGram
February 21, 2008 at 2:30AM
During a conference call, Euronet Chief Executive Michael Brown said he's considering a new offer for MoneyGram, after making an unsolicited takeover bid in December. Last week, Thomas H. Lee Partners and Goldman Sachs Group Inc. agreed to give MoneyGram cash for a stake.
MoneyGram, based in St. Louis Park, lost 83 percent of its market value in the past year, after reporting declines in investments linked to the U.S. housing market. Its shares gained 31 cents Wednesday, to close at $4.89, after trading as high as $4.94 earlier in the day. Euronet's all-stock offer in December valued MoneyGram at $20 a share.
"Euronet is still in the game," said Anurag Rana, an analyst at KeyBanc Capital Markets in New York. "If anyone wants to be in the money-transfer business, buying the No. 2 makes sense. The question is, at what price?" Rana rates both companies "hold."
Euronet tumbled as the Leawood, Kan.-based company provided a first-quarter profit forecast below analysts' estimates. Shares fell $3.46, or 14 percent, to $20.94, their biggest drop since July 2006.
MoneyGram "made some bad investment decisions," Brown told analysts during the conference call.
"But their underlying money-transfer business and the people who run that money-transfer business are strong," he said. "If we do put together the deal and it was accepted by their management, this is not one of those deals that we're going to have to fix up."
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