My Stock Winners

Euronet Worldwide Inc. has proposed paying $1.65 billion in stock for MoneyGram International Inc., which has hit hard times because of its investments in real estate loans. Thats $20 a share

That was Dec , now they backed off because they could not agree on public disclosure of agreement.I dont think Euronet is going to let the “INVESTORS” take this one for only $2.50 a share .

THIS IS POWDER KEG
MARCH 25,08 thats deadline deal
The Company currently expects the amended transaction to close upon the conclusion of a shareholder notice period required by the NYSE when utilizing this exception, which is expected to occur no later than March 25, 2008.

READ AND WEEP

said it had made an unsolicited offer to buy rival money-transfer specialist MoneyGram International Inc. for $1.65 billion in stock.

Euronet, of Leawood, Kansas, said Thursday that MoneyGram had rejected the proposal and the company threatened a proxy contest if MoneyGram won’t agree to discuss its buyout offer, according to the Associated Press.

Euronet, in a Dec. 4 letter offered MoneyGram $20 a share, a 43% premium over that day’s closing share price. The company also indicated it would be willing to raise the offer “if the results of our due-diligence review would warrant it.”

MoneyGram officials declined to comment.

The offer is an outgrowth of the global credit crisis. MoneyGram’s share price has fallen more than 50% this year, largely because of its foray into mortgage-related securities that forced it to book substantial write-downs and take on more debt.

The global money-transfer market has experienced strong growth in recent years, in particular in China and India, but it remains fragmented. Euronet, the No. 3 participant in the $270 billion industry, has a market share of 2%, compared with No. 2 MoneyGram’s 4% share. More than 80% of Euronet’s business is outside the U.S.; MoneyGram is a big player in that country.

A combination of the two would still trail market leader Western Union Co., which controls about 16% of the market. But Euronet believes that MoneyGram’s U.S. presence and 81-year-old brand would give it a powerful tool to fuel expansion, especially in emerging markets where Euronet has a strong position.

Euronet’s bid is considerably below MoneyGram’s 52-week high of $32.24 a share, reached in January. The offer prices MoneyGram at about 14 times earnings per share compared with a price-earnings ratio in the market of about 33 for Euronet and 21 for Western Union.

The approach comes at a difficult time for MoneyGram, based in Minneapolis. The company disclosed in October that it had become ensnared in the subprime-mortgage crisis. Although its core business is money transfer and check processing, MoneyGram recently ventured into the more-exotic realm of mortgage-backed securities in an effort to increase returns at its low margin check-processing business. The move initially generated an improvement in operating earnings but backfired when the markets turned, forcing the company to borrow heavily to shore up its balance sheet.

On Oct. 17, MoneyGram said it had to write down the value of the securities by $230 million and draw down an additional $200 million in credit. That prompted credit-rating company Moody’s Investors Service to lower its rating for the business and warn of further cuts. MoneyGram said recently that it was exploring strategic alternatives for the check business.

Euronet offered to extend immediate financing to MoneyGram to ease its credit woes.

Euronet estimates that the combination would create synergies of $85 million a year, much of it from cost savings. The merged company would have operations in more than 170 countries and a strong foothold in rapidly growing Asian markets.

Capital Appreciation

Value: Value is a measure of a stock’s current worth. MGI has a current Value of $7.15 per share. Therefore, it is undervalued compared to its Price of $3.26 per share. Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates. Value increases when earnings, earnings growth rate and profitability increase, and when interest and inflation rates decrease. We advocate the purchase of undervalued stocks. At some point in time, a stock’s Price and Value always will converge.

RV (Relative Value): RV is an indicator of long-term price appreciation potential. MGI has an RV of 1.36, which is very good on a scale of 0.00 to 2.00. This indicator is far superior to a simple comparison of Price and Value because it is computed from an analysis of projected price appreciation three years out, AAA Corporate Bond Rates, and risk. RV solves the riddle of whether it is preferable to buy High growth, High P/E stocks, or Low growth, Low P/E stocks. We favor the purchase of stocks with RV ratings above 1.00.

Stop (Stop-Price): Stop is an indicator of when to sell a long position or cover a short position. MGI has a Stop of $7.14 per share. This is $3.88 above MGI’s current closing Price. A stock’s Stop is computed from a 13 week moving average of its closing prices, and is fine-tuned according to the stock’s fundamentals. High RV, high RS stocks have lower Stops, and low RV, low RS stocks have higher Stops. In the We system, a stock gets a ‘B’ or ‘H’ recommendation if its Price is above its Stop and an ‘S’ recommendation if its Price is below its Stop.
Sales Growth: Sales Growth is the Sales Growth Rate in percent over the last 12 months. MGI has a Sales Growth of 15.00% per year. This is very good. Sales Growth is updated each week for every stock. It is often useful to compare Sales Growth to Earnings Growth to gain an insight into a company’s operations.

Meanwhile, here is a link to see my past articles of some good picks:)
http://www.mystockwinners.com/comments-on-iag/