Euronet Far from Certain It Will Renew Its Pursuit of MoneyGram

Although the door is still open for Euronet Worldwide Inc. to renew its bid for rival remittance processor MoneyGram International Inc., Euronet's chief executive says it's by no means certain his company will press ahead, despite a determined effort it made to acquire the larger processor just two months ago. “I can't tell you we'll make an offer,” Michael Brown told analysts on a conference call last week. What has changed since Euronet's $1.65 billion stock offer for MoneyGram in December, Brown said, is that credit markets have made financing such a deal less attractive in the wake of the subprime meltdown. “Everybody acts like it's a fait accompli that we'll do a deal, but we have yet to line up financing to our satisfaction and the terms of the deal to our satisfaction,” Brown said. “We'd only do a deal that was way accretive to our shareholders.” Still, pressed by an analyst to say unequivocally Euronet would abandon its interest in pursuing MoneyGram, Brown would not go that far. He and other Euronet executives on the call stressed the attractiveness of MoneyGram's remittance business, adding it would complement Euronet's business globally. MoneyGram's business is largely U.S.-based, while Euronet's is mostly derived from overseas activity. “We've got to evaluate it,” Brown said. “The synergies could more than make up for the risk involved.” Gwenn Bezard, research director at Aite Group LLC, points to the risks to money transfer involved in the declining flow of immigrants to the U.S., particularly from Mexico. But he says picking up MoneyGram might make sense for Euronet in the long run. “There's risk in buying an asset when you have an economic slowdown and a slowdown in immigration to the U.S,” he says. “But long term it might be a pretty good transaction.” Leawood, Kans.-based Euronet and other potential bidders have until March 7 to make an offer under the terms of a so-called go-shop provision of the restructuring plan approved Feb. 11 by the board of Minneapolis-based MoneyGram. Under the plan, an investment group led by private-equity powerhouses Thomas H. Lee Partners L.P. and Goldman, Sachs & Co. would inject anywhere from $710 million to $775 million into the company and provide debt financing of up to $500 million. MoneyGram had earlier spurned the offer from Euronet. Brown in December seemed determine to acquire MoneyGram, hinting he might press a proxy fight if necessary (Digital Transactions News, Dec. 13, 2007). He argued then the market for remittance processing is so fragmented that a combined Euronet-MoneyGram would have an opportunity to grow quickly without having to take any share from No. 1 processor The Western Union Co. Meanwhile, MoneyGram reported it has disposed of about $1.8 billion in securities tied to troubled subprime loans. Its agreement with the investment group requires it to liquidate another $1.9 billion in such investments.