Western Union Co, the world's largest payment transfer company, posted a 16 percent decline in third-quarter earnings on Tuesday, hurt by expenses linked to the buyout of its former parent.

Englewood, Colorado-based Western Union said net income was $216.3 million, or 28 cents a share, compared with $258.1 million, or 34 cents a share, a year earlier.

Analysts on average expected 28 cents a share, according to Reuters Estimates.

Revenue rose 10 percent to $1.257 billion, while expenses rose 15 percent to $927.1 million.

Revenue in wire transfers to and from Mexico fell 1 percent, but transaction volume grew 7 percent, signaling business there is stabilizing, the company said.

Western Union's Mexico revenue was hit last year and earlier this year as talk of immigration reform made many legal and illegal immigrants in the United States wary of attracting government scrutiny by wiring money.

The third-quarter results included $22 million of expenses linked to the vesting of First Data Corp options. First Data, which spun off Western Union last year, was acquired by private equity firm Kohlberg Kravis Roberts & Co in September.

Some Western Union employees had First Union options prior to the spin-off, and those options vested when the leveraged buyout of First Data closed. That represents a noncash expense.

Western Union shares have fallen 15 percent this year, compared with a 3 percent increase for the Standard & Poor's Data Processing Services sub-industry index. (Reporting by Dan Wilchins)