MoneyGram off 50% despite talks

MoneyGram International Inc. said it was negotiating to sell a majority stake in the No. 2 money-transfer company to a private equity firm because of massive and growing losses on mortgage-related investments.

Shares of the Minneapolis-based company plunged $6.02, or 50%, to $6.15 on the news, and Standard & Poor’s cut MoneyGram’s credit rating to junk status.

MoneyGram said Monday that it expected to complete a deal this month under which Boston-based Thomas H. Lee Partners would pay $750 million to $850 million for a stake of 60% to 65% in MoneyGram.

Declines in the value of MoneyGram’s investment portfolio totaled $860 million through Nov. 30, the company said, warning of “significant additional losses” for December.

MoneyGram said its talks with Thomas H. Lee didn’t prevent it from considering other offers. It said it had held talks with No. 3 money-transfer firm Euronet Worldwide Inc., which had been publicly pressuring MoneyGram to discuss a sale. Leawood, Kan.-based Euronet declined to comment Tuesday.

Western Union Co., based in Englewood, Colo., held 16% of the $269-billion money-transfer market in 2006, compared with 4% for MoneyGram and 2% for Euronet, according to Euronet’s website.