MGIC to Buy Radian in $4.9 Billion Stock Deal
Mortgage insurer MGIC Investment Corp. [ticker: MTG] will buy Philadelphia-based rival Radian Group Inc. [ticker: RDN] in a move to cut costs.Milwaukee-based MGIC will exchange 0.9658 of a share for each of Radian's 80.54 million shares outstanding. Radian's stock price in the deal is valued at $60.78 per share, $0.06 lower than yesterday's closing price.The combined company, to be called, MGIC Radian Financial Group Inc., will have nearly $15 billion
in assets and more than $290 billion of primary mortgage insurance in force. It expects to save $128 million pretax, mostly in 2008.Curt S. Culver, chairman and chief executive of MGIC, will retain those titles at the new company. Radian CEO S.A. Ibrahim will initially serve as president and chief operating officer of MGIC Radian Financial. He will succeed Culver as CEO in 2009 and as chairman in 2010.Mortgage insurance protects lenders against losses resulting from borrowers who default on their home loans. It is primarily used when borrowers offer less than 20% of their homes' purchase price as down payment.
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