Western Union Says Reports of Possible MoneyGram Buyout ‘Are Not Accurate’

By Jim Daly

Wire-transfer market leader The Western Union Co. issued a brief statement early Wednesday afternoon saying reports that it is in early talks to buy rival MoneyGram International Inc. “are not accurate.” The statement appeared to quickly deflate the two companies’ stock prices, especially MoneyGram’s, which had soared as much as 40% over Tuesday’s close.

Citing unidentified sources, the Bloomberg news service late Tuesday reported that Englewood, Colo.-based Western Union and Dallas-based MoneyGram, the number-one and -two money-transfer providers in the United States, were in early talks for a potential deal that would have Western Union buying its rival. MoneyGram’s shares subsequently rose sharply in after-hours trading Tuesday and this morning on the New York Stock Exchange. Western Union’s shares also rose as much as 9% on heavy volumes.

But at 1:10 p.m. Eastern Wednesday, Western Union issued this brief statement: “Although our policy is not to comment on market rumors or speculation, and that continues to be our policy on a going forward basis, in view of the high level of market activity in our stock today, Western Union states that current news reports indicating that our company is in discussions to acquire MoneyGram International Inc. are not accurate.”

Asked by Digital Transactions News for a comment, a MoneyGram spokesperson said by email that “MoneyGram does not respond to rumors or speculation.”

Near the close of Wednesday’s trading the companies’ share prices were still up over their previous closes, but much lower. MoneyGram was trading at $9.15, up 17%. Western Union’s stock price was $21.84, up 4%.

Both companies, which have hundreds of thousands of agents worldwide, are struggling with lower domestic pricing and competition from newer Internet-based rivals. MoneyGram, which supplies money-transfer services at Wal-Mart Stores Inc. stores, lost much of Wal-Mart’s domestic business last year to Euronet Worldwide Inc.’s Ria subsidiary, a switch that took a big bite out of MoneyGram’s transaction volumes and profits.

But a proposed union of the two companies could court antitrust scrutiny by the federal government, says attorney Adam Atlas, a Montreal attorney who works with independent sales organizations, money transmitters and other payments-industry clients in the U.S. and Canada.