February 28, 2008 / 3:54 PM / 11 years ago

UPDATE 3-Euronet ends talks to buy rival MoneyGram

(Adds analyst’s comments, updates share movement)

By Sweta Singh

BANGALORE, Feb 28 (Reuters) - Electronic payments provider Euronet Worldwide Inc (EEFT.O) said it would not go ahead with its proposal to buy rival MoneyGram International Inc MGI.N, citing the turmoil in the debt and equity markets.

In the current market environment, the proposal would not give Euronet’s shareholders addition and return on investment that we would require, Euronet Chief Executive Michael Brown said in a statement.

The deal was not in the best interest of Euronet, so they pulled out of it, Anurag Rana of Keybanc Capital markets said by phone.

“They probably were not able to raise enough money to buy MoneyGram,” Rana added.

Euronet said it has ended talks with MoneyGram and its advisers.

MoneyGram’s investment portfolio has taken a hit due to deteriorating credit market conditions, and the company has been struggling to move away from riskier asset-backed securities to safer instruments like government debt.

Shares of MoneyGram closed down nearly 20 percent at $3.70 on the New York Stock Exchange Thursday, while Euronet shares closed at $22.20 on Nasdaq, down about 1.5 percent.

MoneyGram shares have fallen about 70 percent and those of Euronet have lost about 25 percent of their value, since January.

In February, MoneyGram had agreed to sell a majority stake in the company to an investment group led by private equity firm Thomas H. Lee Partners [THL.UL] and investment bank Goldman Sachs & Co (GS.N).

The investors would acquire an equity interest of about 63 percent for some $710 million. The deal gave MoneyGram a “go shop” provision where it could seek alternative proposals, including from Euronet, through March 7.

Both Euronet and MoneyGram did not return calls for comments.

Euronet had made an unsolicited offer to buy MoneyGram for $1.65 billion in stock in December. Discussions did not proceed at the time because the two sides failed to agree on terms under which they would start talks. (Additional reporting by Dhanya Skariachan; Editing by Gopakumar Warrier, Jarshad Kakkrakandy)

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