Buyout firm Madison Dearborn approaches MoneyGram with acquisition bid

Private equity firm Madison Dearborn Partners LLC has approached MoneyGram International Inc (MGI.O), one of the world’s largest money transfer companies, with an acquisition offer, two people familiar with the matter said on Wednesday.

The Dallas-based company has become an acquisition target as intense competition in the sector from digital rivals such as Remitly Global Inc (RELY.O) and Revolut has weighed on its ability to capitalize on the growing market for payments and remittances.

There is no certainty that MoneyGram, which has a market value of about $700 million and carries $800 million in debt net of cash, will agree to any deal, the sources said. The company has engaged with potential buyers several times in the last few years, including in 2019.

Madison Dearborn and MoneyGram declined to comment. MoneyGram shares ended trading on Wednesday up 8.2% at $7.94.

MoneyGram, which according to its website has served 150 million people in the last five years, has been focusing on digital payments as an area of growth. In October, it announced a blockchain partnership that relies on financial technology firm Circle’s USD Coin, one of the world’s fastest-growing dollar digital currencies.

A $1.2 billion deal for China’s Ant Financial to acquire MoneyGram was blocked by the United States in January 2018 on national security concerns. MoneyGram shares took a hit as a result, but have since recovered. They are up 28% year-to-date versus an 18% rise in the Nasdaq Composite index.

The company reported third-quarter operating income of $26.8 million, down from $36.6 million a year ago, amid a rise in transactional expenses.