By
Tolu Ajiboye
September 26th, 2023
MoneyGram’s Chief Executive Officer Alex Holmes will remain at the helm of affairs in the company following the completion of the buyout.
The stock of American cross-border P2P payments and money transfer company, MoneyGram International Inc (NASDAQ: MGI) closed Tuesday’s trading session up 19.55% to $10.71 following the news of the firm’s acquisition by Madison Dearborn Partners LLC (MDP). As reported by Reuters, the acquisition deal is worth $1.8 billion as Madison Dearborn will seek to offset the close to $800 million debt the company is currently owing.
MoneyGram is arguably one of the most popular traditional remittance and money transfer companies well known today. Founded in 1980, the company has an extensive operation around the world, however, stiff competition from both old and new rivals has set the company back in more ways than one.
Per the Reuters report, Funds associated with Madison will acquire MoneyGram for $11 per share, a 23% premium to the stock’s close on Monday. Notably, the valuation of MoneyGram at $1.8 billion comes off as 50% higher than the company’s market capitalization back on December 14, around which the news of Madison’s acquisition first made the headlines.
Madison will be inheriting about 150 million customers around the world, as well as the fight for dominance from competing firms including Remitly Global Inc (NASDAQ: RELY), and Western Union Co (NYSE: WU) amongst others. For Madison to win the bid in an acquisition pursuit that also featured the likes of Siris Capital Group LLC and Advent International Corp, there is an indication that MoneyGram sees in the company what it takes to return MGI back to winning ways.
Per the terms of the transaction, MoneyGram’s Chief Executive Officer Alex Holmes will remain at the helm of affairs in the company following the completion of the buyout. Additionally, the refinancing of MoneyGram’s debts by MDP is expected to take place in the fourth quarter of this year.
Madison to Return MGI and Its Stock to Better Days
The decision to take over an ailing company is a laudable one for Madison Dearborn Partners, one that can be said to be well-deserving seeing China’s Ant Group, a firm more vast in financial products and services try to acquire the Dallas, Texas-based company back in 2018.
While relatively small, Madison Dearborn’s first action will be to take MoneyGram private, beginning its internal restructuring from there. While the company will let MoneyGram maintain its brand name, a number of new strategies that are likely to help MGI stock maintain its recent bullish stint are bound to be introduced in the near future.
For the acquisition, however, Goldman Sachs Group Inc (NYSE: GS), Deutsche Bank Securities Inc, and Barclays PLC (LON: BARC) provided debt financing for the deal, the companies said.