MoneyGram Surges on Reports of Western Union Offer

Shares of MoneyGram International surge on reports that Western Union has made a tie-up offer.

Shares of MoneyGram International  (MGI) - Get Report surged on Tuesday amid reports that Western Union  (WU) - Get Report has made an offer that would join together two of the largest U.S. providers of money-transfer services.

MoneyGram stock was up 36.61% to $3.54 on news of the takeover offer, which was first reported by Bloomberg. No details were immediately available, and no final decision to move forward has been made by either side, a person familiar with the matter told the news service.

A tie-up would create one of the largest money transfer companies in the U.S. and help shore up both companies’ offerings, which have been in steady decline amid growing reliance on direct online payments between banks and individuals.

The Western Union Company was founded in 1851 as a telegram-transmission company. It morphed into a financial services and communications company, eventually discontinuing its telegram service in 2006. 

The company posted adjusted per-share earnings of 44 cents in the first quarter vs. 41 cents a year earlier. Revenue totaled $1.2 billion, an 11% drop from a year ago. 

MoneyGram International formed as a result of two businesses merging, Minneapolis-based Travelers Express and Denver-based Integrated Payment Systems. MoneyGram was first established as a subsidiary of Integrated Payment Systems and afterward became independent company before it was acquired by Travelers in 1998.

Chinese financial services conglomerate Ant Financial Services Group agreed to acquire MoneyGram in 2017 but abandoned the deal after push back from U.S. national security regulators, according to Bloomberg.

Last summer, blockchain startup Ripple agreed to invest $50 million in MoneyGram.

MoneyGram rose as high as 74% in late trading Monday. At its closing price of $2.59, the company had a market value of about $164 million. It also has about $878 million of debt.

Western Union rose 3.5% on Monday to $20.71, giving it a market value of about $8.5 billion. Its shares were up another 11.68% on Tuesday at $23.14.