MoneyGram Shares Spikes Up
MoneyGram Shares Spikes Up: On June 2, the stocks of MoneyGram rose around 50% at the start of trading yesterday. After the initial hike, the spike has an impressive 33% rise at 10 am EDT. Whereas the stocks of Western Union hiked to 12% by the time 10 am EDT with a 15% spike in the curve. This is an odd event occurrence. Here is all you have to know about the spikes.
Western Union Planning To Buy MoneyGram
On June 1, Bloomberg reported Western Union looking to bus a quite smaller rival MoneyGram. This is the second time the MoneyGram is in play. At first, a Chinese Firm, Ant Financial, decided to buy this company for $1.2 billion. But due to the US regulatory system and political pushbacks, the deal was abanded in 2018.
Western Union also has to get permission from the US regulators, but that is not the hard part. The biggest hangup is the questions on the company’s scale of business. However, the online payments business is booming, the business for Western Union and MoneyGram isn’t that sizeable.
On June 2, MoneyGram faced a big price gain, but that only values around $200 million. The deal pricing between Western Union and MoneyGram isn’t disclosed yet. But we can assume the pricing will be lesser than the Ant Financial offered in the past.
How Is The Deal Beneficial?
In this kind of deal, the stock of the target company rises while the acquiring company faces a decline. But that not happened in this case. That indicates investors think the deal is beneficial for Western Union. The timing is the deal is also pretty opportunistic as the lockdown impacted the reduction of international money transfers and revenue in the industry. So, it seems to have a positive attitude all involved.
Well, the deal is likely to be approved from Wall Street, but the deal isn’t done yet. It is all in the early stages of the agreement. And no investor will buy any company stock based on the rumors spreading. So, the deal may benefit both if it is done. Moreover, this deal is viewed as two older competitors emerging in an industry facing structural change. And that did not work for more cases in the past.