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Western Union (WU) Ends First Closing of Business Solutions Unit
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The Western Union Company (WU - Free Report) recently completed the first closing of the previously announced divestiture of its Business Solutions segment to a consortium of Goldfinch Partners, LLC and The Baupost Group, LLC.
The deal will close in two stages as mentioned earlier by the management. Western Union received $910 million worth of cash. In the initial closing, Western Union Business Solutions, excluding the business that is operated via Western Union International Bank in the European Union and the United Kingdom, was sold. The outstanding Western Union Business Solutions business will be divested at the second closing, which is estimated to close in the second half of this year.
Reasons for the Sale
When management had announced this divestiture in August 2021, it was then said Western Union will decide the purpose of the sale proceeds depending on market conditions. WU might use the funds generated for reinvestment in its business to enhance growth or use the amount for capital deployment or strategic acquisitions.
WU decided to divest this business to focus on further penetration in the global cross-border consumer payments market. This financial transaction services player also has plans to broaden its open platform strategy to cater to multiple customer segments and use cases. In August 2021, WU also declared its plans to boost its total addressable market via a Western Union-branded consumer ecosystem strategy.
Having contributed 8.3% to WU’s 2021 revenues, Business Solution facilitates payment and foreign exchange solutions, primarily cross-border, cross currency transactions, for small and medium-sized enterprises and other organizations and individuals. On its last earnings call, management said that 60% of the pre-tax gain is expected to be recognized in the first quarter at the time of the first expected closing.
Prior to this in 2019, WU sold its Speedpay business and Paymap mortgage payments services business. Apart from divestments, WU ties up with leading companies to bolster its digital services portfolio and pursue a digital partnership strategy for enhancing and digitizing the money movement process for consumers and businesses.
WU remains committed to broadening its financial services, thereby catering to the evolving needs of consumers and enabling them to conveniently move money globally.
Shares of WU have shed 29.3% of value in a year’s time, narrower than the industry’s decline of 34.9%.
Some better-ranked stocks in the finance space are Cantaloupe Inc. (CTLP - Free Report) , WEX Inc. (WEX - Free Report) and Virtu Financial, Inc. (VIRT - Free Report) . While VIRT sports a Zacks Rank of 1, both CTLP and WEX carry a Zacks Rank #2 (Buy) at present.
Cantaloupe is a software and payments company, providing end-to-end technology solutions for the unattended retail market. WU came up with a trailing four-quarter surprise of 108.3%, on average.
WEX is a leading provider of payment processing and business solutions across a wide spectrum of sectors, including fleet, travel and healthcare. WEX delivered a trailing four-quarter surprise of 9.96%, on average.
Virtu Financial is a market-leading financial services firm that leverages cutting-edge technology to provide execution services and data plus analytics and connectivity products to its clients as well as deliver liquidity to the global markets. Earnings of VIRT managed to beat estimates in three of its trailing four quarters (missing the mark in one), the average beat being 24.76%.
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Western Union (WU) Ends First Closing of Business Solutions Unit
The Western Union Company (WU - Free Report) recently completed the first closing of the previously announced divestiture of its Business Solutions segment to a consortium of Goldfinch Partners, LLC and The Baupost Group, LLC.
The deal will close in two stages as mentioned earlier by the management. Western Union received $910 million worth of cash. In the initial closing, Western Union Business Solutions, excluding the business that is operated via Western Union International Bank in the European Union and the United Kingdom, was sold. The outstanding Western Union Business Solutions business will be divested at the second closing, which is estimated to close in the second half of this year.
Reasons for the Sale
When management had announced this divestiture in August 2021, it was then said Western Union will decide the purpose of the sale proceeds depending on market conditions. WU might use the funds generated for reinvestment in its business to enhance growth or use the amount for capital deployment or strategic acquisitions.
WU decided to divest this business to focus on further penetration in the global cross-border consumer payments market. This financial transaction services player also has plans to broaden its open platform strategy to cater to multiple customer segments and use cases. In August 2021, WU also declared its plans to boost its total addressable market via a Western Union-branded consumer ecosystem strategy.
Having contributed 8.3% to WU’s 2021 revenues, Business Solution facilitates payment and foreign exchange solutions, primarily cross-border, cross currency transactions, for small and medium-sized enterprises and other organizations and individuals. On its last earnings call, management said that 60% of the pre-tax gain is expected to be recognized in the first quarter at the time of the first expected closing.
Prior to this in 2019, WU sold its Speedpay business and Paymap mortgage payments services business. Apart from divestments, WU ties up with leading companies to bolster its digital services portfolio and pursue a digital partnership strategy for enhancing and digitizing the money movement process for consumers and businesses.
WU remains committed to broadening its financial services, thereby catering to the evolving needs of consumers and enabling them to conveniently move money globally.
Shares of WU have shed 29.3% of value in a year’s time, narrower than the industry’s decline of 34.9%.
Image Source: Zacks Investment Research
WU has a Zacks Rank #4 (Sell) at the moment.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. However, its solid fundamentals, digital money transfer services, and other factors will help it bounce back going forward.
Stocks to Consider
Some better-ranked stocks in the finance space are Cantaloupe Inc. (CTLP - Free Report) , WEX Inc. (WEX - Free Report) and Virtu Financial, Inc. (VIRT - Free Report) . While VIRT sports a Zacks Rank of 1, both CTLP and WEX carry a Zacks Rank #2 (Buy) at present.
Cantaloupe is a software and payments company, providing end-to-end technology solutions for the unattended retail market. WU came up with a trailing four-quarter surprise of 108.3%, on average.
WEX is a leading provider of payment processing and business solutions across a wide spectrum of sectors, including fleet, travel and healthcare. WEX delivered a trailing four-quarter surprise of 9.96%, on average.
Virtu Financial is a market-leading financial services firm that leverages cutting-edge technology to provide execution services and data plus analytics and connectivity products to its clients as well as deliver liquidity to the global markets. Earnings of VIRT managed to beat estimates in three of its trailing four quarters (missing the mark in one), the average beat being 24.76%.