MGIC to acquire Radian for $4.9 billion in stock

MGIC Investment Corp., the largest U.S. mortgage insurer, will buy No. 3 Radian Group Inc. for $4.9 billion in stock as the market for protection against home-loan defaults stagnates.

Milwaukee-based MGIC agreed to exchange 0.9658 of a share of its stock for each share of Philadelphia-based Radian, paying no premium to Radian’s $61.28 closing share price Friday, the two companies said.

The new company, assuming control of about a third of the country’s mortgage insurance market, plans to cut almost a quarter of its combined costs as second, or “piggyback,” home loans reduce the need for insurance on mortgages with low down payments.