Moneygram (MGI) stock soars on US$1.8 bn purchase offer by Madison

Highlights

• Madison Dearborn Partners, LLC (MDP) to acquire MoneyGram International Inc. (MGI) for US$1.8 billion in an all-cash deal.

• The transaction will likely close in the fourth quarter of 2022.

• After completing the transaction, MoneyGram will cease to be a public company.

Moneygram International, Inc. (NASDAQ:MGI) stock surged over 18% on Tuesday after it said private equity firm Madison Dearborn Partners, LLC will acquire the company for US$1.8 billion. 

Moneygram (MGI) stock surged by 18.32% to US$10.59 in the premarket on Tuesday.

The Chicago-based Madison Dearborn will buy all the outstanding shares of MGI at US$11.00 per unit in an all-cash transaction. The deal is valued at around US$1.8 billion.

The MGI stock on Monday closed at US$8.95, below the share value fixed in the deal, or a

premium of around 50% on the closing price of US$7.89 on December 31, 2021, the trading day before the speculations over the acquisition began.

MoneyGram shareholders will receive US$11.00 in cash for each MGI common share they own. 

Madison Dearborn will refinance MGI’s outstanding debt, estimated around US$799 million as of December 31, 2021, after the transaction close, possible in the fourth quarter of 2022.  

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After completing the transaction, Dallas-based MoneyGram will cease to be a public company. MoneyGram said the deal would help accelerate its digital growth strategy. 

MoneyGram’s sole financial advisor is BofA Securities, Inc, while MDP’s lead financial advisor is Goldman Sachs & Co. LLC. Its other financial advisors are Deutsche Bank Securities Inc., Barclays, and J.P. Morgan Securities LLC.

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MoneyGram International Inc (MGI):

MoneyGram International Inc. offers financial solutions. Its reportable segments are Global Funds Transfer and Financial Paper Products. The company has grown with its innovative solutions and served more than 150 million customers in the last five years.

MoneyGram was founded in 1980 and launched its IPO in June 2004. 

MGI has cancelled a planned conference call to discuss the fourth-quarter and full-year 2021 results on February 25, 2022, as the transaction is in process. 

For the nine months ended September 30, 2021, it posted a net loss of US$42.1 million compared to US$15.2 million for the same period in 2020. The cash and equivalents stood at US$152.6 million as of September 30, 2021.  

Its revenue has constantly decreased in the last five years through fiscal 2020.

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Madison Dearborn Partners, LLC or MDP:

Formed in 1992, private equity firm MDP invests in five industry verticals, including financial & transaction services, business and government software & services, health care, basic industries, and telecom, media & technology services. 

Bottomline

The finance sector is seeing rapid changes with the entry of blockchain and other innovative products. Companies that could adapt to the changes remained competitive; others saw a rapid decline. MGI stock fell 5% in one year but rose 15.78% YTD as of February 14, 2022.