MGIC re-evaluates merger with Radian Group
MGIC Investment Corp. said Tuesday that its management has preliminarily determined MGIC is not obligated to complete its pending $4.9 billion merger with Radian Group Inc., and has advised the New York Insurance Department of the company's position.
Management of MGIC (NYSE: MTG) said it re-evaluated the company's position in light of developments last week with C-BASS, a company capitalized by MGIC and Radian (NYSE: RDN), that is being hit hard by the troubles in the subprime mortgage market.
C-BASS, of New York City, is a limited liability company that is a subprime lending affiliate.
Shares of MGIC plunged last week after the announcement that its entire $516 million investment in C-BASS could be impaired.
Radian, a Philadelphia mortgage insurer, has informed MGIC that it disagrees with MGIC management's preliminary assessment.
MGIC's management also is reviewing other developments that may affect MGIC's obligation to close the deal, MGIC said in a statement.
Whether the Milwaukee-based mortgage insurer concludes that it is not obligated to close the merger is a decision that will be made by its board of directors. The board will not be asked to decide until MGIC's management has completed its analysis, the company said. In connection with management's analysis, MGIC is requesting additional information from Radian. MGIC's management said it does not expect its analysis will be completed until next week.
MGIC's stock was up $1.56, to $35.09, in after-hours trading on Tuesday.
Radian management issued a press release late Tuesday afternoon stating it is not aware of any developments that would impact MGIC's obligation to close the merger.
"Importantly, Radian has fully complied with all of its obligations under the merger agreement," the company said. "Stockholders of both companies have already approved the merger, and we continue to believe that the transaction is in their best interests."
Radian executives said they remain committed to the transaction, "and look forward to completing it as promptly as possible.
Radian stock was down $2.61 in after-hours trading, to $20.62.
Source, for a lack of a better word...http://eastbay.bizjournals.com/eastbay/othercities/milwaukee/stories/2007/08/06/daily19.html?b=1186372800%5E1502920