E-payments processor and ATM operator Euronet Worldwide says it will not launch a new bid to acquire fund transfer outfit Moneygram due to the slowdown in the debt and equity markets.
Euronet made an unsolicited $1.65 billion bid to acquire MoneyGram in December 2007. The stock offer valued MoneyGram at $20 per share - some 40% higher than the stock's price at the time - but was rebuffed by MoneyGram.
Earlier this month MoneyGram agreed to be bought out by a consortium led by private equity firm Thomas H Lee Partners and Goldman Sachs, which is making a $710 million equity investment in the company. However the agreement includes a "go shop" provision which allows MoneyGram to shop around for another deal, including from Euronet, until 7 March.
Last week, in a statement accompanying its earning release, Euronet said it was considering making a new bid for MoneyGram, despite losing around $14 million on its investment in the money transfer firm.
Euronet said at the end of 2007 it purchased 1.3 million MoneyGram shares for $20 million. But the trading price for the stock dived after MoneyGram reported major losses following the subprime mortgage crisis. Euronet said the aggregate value of its investment in MoneyGram as of 19 February was reduced to just $6.1 million.
Euronet now says it has "ceased discussions" with MoneyGram regarding a potential acquisition.
"Although the acquisition has tremendous industrial logic, and may be quite beneficial to MoneyGram's shareholders, the current debt and equity markets will not enable us to acquire MoneyGram on terms that would give our Euronet shareholders the accretion and return on investment that we would require," says Euronet chairman and CEO Michael Brown in a statement.