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First Data Gets Western Union in a $900-Million Transaction

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From Bloomberg Business News

First Data Corp. agreed to buy most of Western Union Financial Services Inc. for about $900 million in cash and assumed liabilities, giving it virtual control of the worldwide money transfer business.

First Data will pay $595 million in cash and assume an estimated $261 million in pension liabilities and $40 million in other debt of Western Union’s parent company, New Valley Corp.

The sale will strip New Valley of its primary business, leaving it with Western Union’s message service, about $800 million in cash and $1.1 billion in tax credits that can be used to offset profits in future years. Paramus, N.J.-based New Valley changed its name from Western Union in September, 1991, and filed for bankruptcy protection in March, 1993.

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After the transaction, First Data will control the services of wiring money and providing money orders for the estimated 20% of U.S. households that don’t have bank accounts, several analysts said.

For First Data, part of the attraction of Western Union was its highly recognizable brand name, as well as its estimated 90% share of the money transfer business.

“An important part of the transaction was licensing the name,” said Gary Tobin, a spokesman for First Data.

First Data shares closed unchanged at 45 on the New York Stock Exchange.

First Data, a former unit of American Express Co., mainly provides “back office” information and transaction processing for the telecommunications and financial services industries, among others.

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