MGIC and Radian Stop Acquisition Talks
The biggest U.S. mortgage insurer, MGIC Investment Corp abandoned talks to acquire Radian Group Inc. for about $2.4 billion as subprime loans defaulted at the highest in five years.
Milwaukee-based MGIC shares have been down 57 percent since its announcement in February to acquire Radian, based in Philadelphia. The companies stated today tha it is “their best interests to remain independent.''
The deal began to unravel in August, and MGIC sued Radian, saying Radian wasn't providing details about its businesses that may be “particularly susceptible'' to turmoil in credit markets. MGIC also said it was reconsidering the merger as rising homeowner delinquencies threatened lenders that the companies protect. Last month Radian said that MGIC was obligated to complete the deal.
“They may have concluded their only option was to walk away with a friendly goodbye,'' Rob Haines, a debt analyst at New York- based CreditSights Inc., said of Radian.
Radian shares fell $1.71, or 9.4 percent, to $16.40 at 9:54 a.m. in New York Stock Exchange composite trading, the lowest in almost nine years. MGIC rose 34 cents, or 1.1 percent, to $30.68.
All outstanding litigation between MGIC and Radian has been withdrawn, and no payments were made to end the merger, the companies said in their statement. The deal was valued at $4.9 billion when it was announced Feb. 6.
Published on September 5, 2007
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