Candygram - History - 20th Century

20th Century

The company continued to grow, acquiring more than 500 smaller competitors. Its monopoly power was almost complete in 1943 when it bought Postal Telegraph, Inc., its chief rival.

In 1914 Western Union offered the first charge card for consumers; in 1923 it introduced teletypewriters to join its branches. Singing telegrams followed in 1933, intercity fax in 1935, and commercial intercity microwave communications in 1943. In 1958, it began offering Telex service to customers in New York City. Western Union introduced the 'Candygram' in the 1960s, a box of chocolates accompanying a telegram featured in a commercial with the rotund Don Wilson. In 1964, Western Union initiated a transcontinental microwave system to replace land lines.

During World War II, families of sons in the military service dreaded the Western Union "boy on his bicycle" to arrive at their home with a telegram from the War Department or the Navy Department. The message began: The Secretary of War (soldiers and airmen) or Secretary of Navy (sailors and marines), regrets to inform you that, (name, rank and serial number of the man in the military service) was killed in action or missing in action.

Western Union became the first American telecommunications corporation to maintain its own fleet of geosynchronous communication satellites, starting in 1974. The fleet of satellites, called Westar, carried communications within the Western Union company for telegram and mailgram message data to Western Union bureaus nationwide. It also handled traffic for its Telex and TWX (Telex II) services. The Westar satellites' transponders were also leased by other companies for relaying video, voice, data, and facsimile (fax) transmissions.

In 1963 Western Union organized its international cable system properties and its right-of-way for connecting international telegraph lines into a separate company called Western Union International (WUI) which it divested that year to American Securities. In 1983 American Securities sold WUI to MCI Communications which renamed it to MCI International and moved its headquarters from New York City to Rye Brook, New York.

In the 1970s WUI installed and leased to the U.S. Department of Defense (DOD) dedicated 50 Kbps high speed telecommunications facilities between the continental U.S. and Hawaii, Germany and the United Kingdom to provide a test bed for the DOD's Advanced Research Projects Agency (ARPA). This test bed provided ARPA with a proof of concept for the technology of packet switching which later became the Internet.

In 1976, Western Union partnered with E. F. Hutton & Co..

In 1981 Western Union purchased a fifty percent interest in Airfone. It sold Airfone to GTE in 1986 for $39 million in cash.

Due to declining profits and mounting debts, Western Union slowly began to divest itself of telecommunications-based assets starting in the early 1980s. Due to deregulation at the time, Western Union began sending money outside the country, re-inventing itself as "The fastest way to send money worldwide" and expanding its agent locations internationally.

In 1987, Investor Bennett S. LeBow acquired control of Western Union through an outside of chapter 11 process that was a complex leveraged recapitalization. The transaction was backed by a total of $900 million in high yield bonds and preferred stock underwritten by Michael Milken's group at Drexel Burnham Lambert as part of an exchange offer. LeBow installed Robert J. Amman as President and CEO who led a complete strategic, operational and balance sheet restructuring of the company over the subsequent 6 years.

Mr. Amman executed a strategy of redirecting Western Union from being an asset-based provider of communications services, with a money transfer business as a large but less important part of the business, into being a provider of consumer-based money transfer financial services. In so doing, Mr. Amman ran the company as two separate companies. One business consisted of the money transfer business, which was funded and operated to take advantage of the significant growth opportunity. The second unit consisted of all the non-strategic communications assets such as the long distance analog voice network, satellite business and undersea cable assets. In the 3 year period through 1990 Mr. Amman was supported by Robert A. Schriesheim, also installed by Mr. LeBow, as a special advisor who oversaw the divestiture of the four non-strategic telecommunications assets for about $280 million.

The official name of the corporation was changed to New Valley Corporation in 1991, just in time for that entity to seek bankruptcy protection as part of Mr. Amman's strategy to eliminate the overleveraged balance sheet while continuing to grow the money transfer business . The name change was taken to shield the Western Union name from being dragged through the proceedings (and the bad PR that would cause). Under the day to day leadership of Robert J. Amman and the backing of LeBow, the company's value increased dramatically through its years operating under chapter 11.

Following various restructurings that included negotiations with Carl Icahn who became a large bond holder, Mr. Amman engineered the sale of New Valley in a bankruptcy auction to First Financial Management Corporation in 1994 for $1.2 billion where he became vice chairman, and a year later merged with First Data Corporation in a $6 billion transaction. On January 26, 2006, First Data Corporation announced plans to spin Western Union off as an independent, publicly traded company. Western Union's focus will remain money transfers. The next day, Western Union announced that it would cease offering telegram transmission and delivery, the product most associated with the company throughout its history. This was, however, not the original Western Union telegram service, but a new service of First Data under the Western Union banner; the original telegram service was sold off after New Valley Corporation's bankruptcy and now operates as iTelegram.

The spin off was completed in September and Western Union is now an independent, publicly traded company.

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