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Ozforex Group Ltd share price set to soar on takeover bid

Credit: Images Money

Shares of OzForex Group Ltd (ASX: OFX) are expected to explode this morning after the online foreign exchange business announced it has received a takeover bid from the United States-based Western Union.

The company said the indicative proposal contemplates an all-cash consideration of between $3.50 and $3.70 per share, the mid-point of which represents a 38% premium to yesterday’s closing price ($2.60) and a near 21% premium to the shares 52-week high of $2.98.

At this stage, the offer is preliminary, non-binding and conditional based on access to due diligence, as well as retention of management and relevant regulatory approvals. As such, it is by no means definite that a transaction will proceed with management stating it will update the market following consideration of the proposal.

However, it did say that: “Irrespective of whether the Indicative Proposal proceeds, the Board believes that OzForex has a very attractive independent future and that it is well positioned to continue to deliver strong growth.”

It seems OzForex would be a good suit for Western Union, especially now with the Australian dollar languishing around US 71 cents, making the acquisition cheaper in US dollar terms. Western Union has faced increased competition in recent years as it expands from cash-based business to one with more of a focus on digital payments, and OzForex could help fill that gap.

After floating its shares on the ASX as recently as October 2013, OzForex isn’t the only freshly-listed company to receive a takeover offer recently. Veda Group Ltd (ASX: VED) listed its shares just two months later and recently received an offer from Equifax, also at a significant premium.

OzForex’s shares will reopen for trade at 11am on Thursday.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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