Why Shares of Moneygram Are Up Today

What happened

Shares of MoneyGram International (NASDAQ:MGI) were nearly 13% higher as of 3:20 p.m. EDT today after Bloomberg reported that multiple parties were interested in acquiring the company.

So what

Bloomberg, citing anonymous sources, reported that the interest in acquiring MoneyGram, one of the largest money-transfer companies in the U.S., is coming from the cross-border payments company Stellar Development Foundation and a private equity firm called Advent. The two are reportedly working together on a potential acquisition.

This isn’t the first time there have been takeover rumors regarding MoneyGram. Last year, its biggest rival, Western Union (NYSE:WU), had supposedly been interested in acquiring the company.

And in 2017, the Chinese financial firm Ant Group, partly owned by Alibaba Group Holding (NYSE:BABA), actually announced its intention to acquire MoneyGram. But the deal ultimately fell apart after U.S. regulators rejected it due to national security concerns.

Red squiggly line with arrow trending upward.

Image source: Getty Images.

Now what

It’s common for shares to rise amid takeover rumors because buyers typically pay a premium when acquiring a company. But MoneyGram is a complex stock to speculate on, simply because it has been the subject of so many prior takeover rumors.

Still, the company has been doing a lot of work around digital transformation. It has updated its IT infrastructure and improved its customer service and compliance operations, and now a significant amount of its transactions are made digitally. MoneyGram also recently completed a long-standing settlement deal with the U.S. Department of Justice, so things do appear to be moving in a positive direction for the company, aside from the acquisition rumors.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/07/21/why-shares-of-moneygram-are-up-today/

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