MGIC, Radian call off merger

MGIC, Radian call off merger

MGIC, Radian call off merger
MILWAUKEE, Sept. 5 (UPI) --

U.S. mortgage insurers MGIC Investment Corp. and Radian Group Inc. said Wednesday they had abandoned plans to merge due to mortgage-industry troubles.

"Both MGIC and Radian believe it is in their best interests to remain independent companies at this time," the companies said in a statement.

"All outstanding litigation between the companies will be withdrawn. Neither party made a payment to the other in connection with the termination," the statement said.

The litigation followed an August announcement by Milwaukee's MGIC, the nation's largest home-loan insurer, that it wasn't obligated to complete the Radin merger announced in February because the value of the companies' Credit-Based Asset Servicing & Securitization LLC joint venture -- which creates mortgage-backed securities from mortgages of people with weak credit -- had plummeted with the U.S. subprime-mortgage crisis.

Days earlier, Radian, a Philadelphia a credit risk manager, said "unprecedented" disruptions in the market for risky mortgages might have wiped out both companies' stakes in C-BASS, valued at more than $1 billion two months earlier.

The companies' stocks, and the $4.9 billion value of their stock merger, plummeted after the announcements.

The original deal valued Radian shares at $60.78. Its shares closed at $18.11 Tuesday. MGIC shares, valued at $70.09 the day the deal was announced, closed at $30.34 Tuesday.