Euronet shares slump; AMIS Holdings' shares jump on ON Semiconductor merger plan

By Sheri Kasprzak

New York, Dec. 13 - MoneyGram International, Inc. shares were up on Thursday after Euronet Worldwide Inc. pressed the money transfer company to accept its $1.65 billion buyout offer, but Euronet's stock fell by 12.37%.

Euronet isn't taking "no" very easily, though, and has offered to sweeten the deal by providing interim financing for MoneyGram if a business combination agreement is entered between the two.

And if MoneyGram doesn't take the sweet route, Euronet said it is prepared to take a nastier route and snap up seats on MoneyGram's board or make unsolicited bids for MoneyGram shares to force an agreement.

"It seems like it could get pretty nasty," said a sellside trader, who was watching the events unfolding Thursday. "They seem pretty dedicated to making this buyout happen and, to be fair, their offer seems good. I would be surprised if MoneyGram doesn't take them up on their financing offer."

In a letter Euronet sent to MoneyGram's board of directors earlier this month, Euronet expressed its disappointment in MoneyGram's refusal to consider a business combination.

Shares of Euronet, which had fallen as much as 15% on the day, slumped by 12.37%, or $4.03, to end the day at $28.54 (Nasdaq: EEFT). The stock gave up another 72 cents in after-hours trading.

Meanwhile, shares of MoneyGram climbed by almost 16%, or $2.37, to settle at $17.27 Thursday (NYSE: MGI). The stock gained another 11 cents in after-hours trading.

Euronet to buy MoneyGram

On Thursday, Euronet released a letter it sent to MoneyGram's board of directors.

Under the proposal, Euronet will issue 0.6179 Euronet share for every share of MoneyGram. The transaction values MoneyGram's stock at $20 per share. The share price is a 43% premium to MoneyGram's closing stock price of $14.01 on Dec. 4.

Under the proposal, MoneyGram shareholders will hold 46% of the combined company.

In the letter to MoneyGram's board, Euronet said it feels the proposed transaction would "create a powerful, new global player in the money transfer business, well positioned to capture share in a highly fragmented market."

The letter also says the move would allow both companies to benefit from rapid growth in the money transfer business in emerging countries like China and India and would "generate double-digit accretion and deliver significant synergies."

"We believe MoneyGram is an attractive business and a combination with Euronet would create a powerful new player in the international money transfer business that would deliver substantial immediate and long-term value for the shareholders of both companies," said Euronet CEO Michael Brown in the letter to MoneyGram's board.

"As you know, we have highly complementary distribution networks, corridors and agent locations. The combination we envision will expand the geographic network of both companies and unlock compelling opportunities, enabling us to leverage both of our international efforts and capture rapid growth in global markets."

In the letter, Brown went on to say that Euronet is aware that MoneyGram is seeking financing in the near term and noted that Euronet is "prepared to make available to MoneyGram interim financing in the context of an agreement on a business combination transaction."

Brown said Euronet has $250 million in cash on hand and has funds available under current financing arrangements, and would be willing to "move quickly" to make such a financing arrangement for MoneyGram.

MoneyGram responds

MoneyGram released a response to Euronet's letter, claiming it indicated it would be willing to meet with Euronet to discuss the proposal to possibly execute a mutual confidentiality and standstill agreement.

"On Dec. 12, 2007, MoneyGram received a communication from Euronet stating that Euronet is not prepared to pursue discussions with MoneyGram on that basis," a statement from MoneyGram released Thursday said.

The release went on to say that MoneyGram has not concluded its valuation of its securities portfolio as of Nov. 30.

ON Semiconductor, AMIS to merge

In other merger news, ON Semiconductor is penning a merger deal with AMIS Holding for $915 million in an all-stock deal.

"The acquisition of AMIS furthers the transformation of ON Semiconductor into an analog and power solutions leader with enhanced scale, higher value and higher margin products, deep customer relationships and an expanded addressable market," said Keith Jackson, ON's CEO, in a statement.

"Combining ON Semiconductor's leading standard products and advanced manufacturing infrastructure with AMIS's growing standard products business and substantial customer product portfolio will enable the combined company to more comprehensively address our customer's needs."

AMIS shareholders will receive 1.15 shares of ON stock for every AMIS share held. The transaction values AMIS shares at $10.14 each.

Once the deal is done, ON will issue 104 million shares. ON shareholders will hold 74% of the combined company and AMIS shareholders will hold 26%.

Shares of ON were off by 28 cents, or 3.17%, to close at $8.54 (Nasdaq: ONNN). AMIS stock, however, was up by 31.16%, or $2.29, to close at $9.64 (Nasdaq: AMIS).

"This transaction represents a compelling opportunity for AMIS employees, customers and shareholders by combining the outstanding manufacturing excellence of ON Semiconductor with the world-class mixed-signal design talent of AMIS," said Christine King, AMIS's CEO, in a news release.

"We believe AMIS shareholders will not only benefit from the initial premium represented by the purchase price, but also from a significant post-merger ownership in a combined ON Semiconductor/AMIS company that is expected to have enhanced growth, cash flow and profitability prospects."

Assuming both companies' shareholders approve the transaction, the deal is expected to close in the first half of 2008.

Once the merger is completed, ON CEO Keith Jackson will be the CEO and president of the combined company and the combined company's headquarters will be in Phoenix. ON's non-executive chairman, Daniel McCranie, will continue as non-executive chairman of the combined company. The board will be expanded to eight members, adding AMIS's CEO King.

Shares of the combined company will continue to trade on Nasdaq under the symbol ONNN.

Connected to the merger, ON's board increased its share repurchase authorization to 50 million shares from 30 million shares.

ON, based in Phoenix, is a supplier of power solutions to engineers, purchasing professionals, distributors and contract manufacturers in the power supply, computer, cell phone and portable device markets.

AMI Semiconductor, owned by AMIS Holdings, manufactures silicon chips for the semiconductor market.

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