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Western Union Coming Out

The First Data unit will be spun off.

Western Union, the storied telegram conduit, will again be a stand-alone company.

First Data

(FDC) - Get First Data Corporation Class A Report

, the payment processor that has owned Western Union since 1995, said Thursday that it will spin off the division to shareholders. The tax-free spinoff will convert Western Union, which dates back to 1851 and began as a telegraph transmission outfit, into a separate, publicly traded company.

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In early trading, First Data shareholders applauded the move, pushing the company's shares up $3.16, or 7%, to $46.16.

The move to spin off Western Union wasn't a total surprise. Back in November, First Data hired Morgan Stanley to review its business strategies and find a way to provide a lift to its lagging stock.

The news of the spinoff came on the say day that First Data reported a 14% decline in fourth quarter profits. The company said it earned $398 million, or 52 cents a share, down from $465 million, or 56 cents, a year ago.

On an operating basis, which excluded a number of charges, First Data earned 62 cents a share, which came in 3 cents short of the Thomson Financial estimate.

Revenue rose 3% to $2.8 billion. Western Union accounts for about 36% of the company's overall revenue.