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Western Union Auctioned for $1.15 Billion : Bankruptcy: First Financial Management wins unusual open-court bidding for the money transfer company.

September 20, 1994|From Reuters

NEWARK, N.J. — First Financial Management Corp. won the bidding for money transfer company Western Union Corp. on Monday with a $1.153-billion offer, a Bankruptcy Court judge said at the end of an unusual open-court auction.

Western Union, owned by New Valley Corp. of Upper Saddle River, N.J., is being sold to satisfy its creditors as part of New Valley's Chapter 11 bankruptcy filing. The bidding reached such high levels that New Valley's creditors should be repaid in full.

"Well, this long process is over and the marketplace seems to have won. This seems to be the highest and best offer for the company," Bankruptcy Judge Novalyn Winfield told the court.

Atlanta-based First Financial beat out rival Forstmann Little & Co., which dropped out of the bidding at $1.143 billion. First Data Corp. of Hackensack, N.J., also pulled out of the bidding.

First Data, a huge credit card processing company, opened up the takeover battle in June when it bid $660 million for Western Union. The bids had been rising ever since.

First Financial Management authorizes and processes credit cards, verifies checks, manages electronic databases, processes health care claims and collects debts.

It will get Western Union's 24,000 agents in more than 70 countries. Western Union is the largest money transfer business in the world.

"We are all very pleased at the outcome and believe that the combination of our companies will greatly improve our financial picture in the future," said Christopher Trowler, an attorney for First Financial Management.

Although its parent is in bankruptcy, Western Union is in sound financial shape. It also has growth prospects that make it an enticing target, analysts say.

All bidders were required to submit their final offers on Sept. 16, but the court allowed the auction to continue openly in the courtroom Monday.

Creditors, who will be repaid at 100 cents on the dollar for their debts, said they were pleased with the outcome. Carl Icahn, who owns about $80 million worth of New Valley bonds, said: "This open bidding is terrific. I think it should be adopted in other bankruptcy cases."

He said he bought the bonds at 20 cents to 30 cents on the dollar.

A committee that included New Valley management, creditors, union workers and stockholders decided which bid was the best, subject to court approval.

The court is expected to approve the sale by Sept. 30.

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