Word: moneygram
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...Western Union has only one truly global competitor, which is stuck playing David to its Goliath. MoneyGram was founded in 1988, back when Western Union was spiraling toward bankruptcy. The industry leader had made a bad bet on its Telex division, which was obliterated by the sudden rise of the fax machine. But MoneyGram was dumped for antitrust reasons in 1996 after its parent company, First Data, picked up the much larger and better known Western Union, which had filed for Chapter...
...subsidiary of Viad, based in Phoenix, MoneyGram has more than doubled its global agent base, from 25,000 to 60,000, within the past three years. MoneyGram also scored a few big wins last year, including deals to place its outlets in Wal-Mart stores and Canada Post offices. "We're trying to be nimble and move quickly," says Phil Milne, who heads the money-transfer company, based in Minneapolis. MoneyGram generally charges lower transaction fees and offers a better exchange rate than Western Union. But Western Union, having partnered with national post offices in some 25 countries, including...
...MoneyGram isn't the worst of this lot, not by a long shot. But it'll be among the biggest and most aggressively sold. For legal reasons, the company faces a Jan. 23 deadline to go public. On the plus side: unlike companies with no revenue and barely more than a product design, MoneyGram has a real business. Last year it earned $18 million on revenue of $137 million. Earnings are down a bit this year, but money transfers are on the rise. It has 16% of the worldwide nonbank consumer-money-transfer market. But Western Union, the granddaddy...
...least of those is MoneyGram's parent, First Data Corp., a big credit card-processing outfit that is the selling shareholder in the IPO. Last year First Data bought another data grinder, First Financial Management Corp., which just happened to own Western Union. The Federal Trade Commission took one look at the MoneyGram-Western Union union and said, Uh-uh. First Data would have to choose one and sell the other...
...worm in it. "If you're going to keep one of the two pieces, why not make it the one that is by far the market leader?" says First Data spokesman Don Sharp. And the point is, If Western Union is so clearly better, why should anyone invest in MoneyGram? Even before the company was rejected by other buyers, some of MoneyGram's biggest agent networks were fleeing. "It was like a piece of merchandise that didn't move, so we dropped it," says Tom Dingledy, spokesman for drug-store chain Revco D.S. Another defector, Greyhound Lines, struck a deal...