Published on the 10/02/2016 | Written by Beverley Head
OzForex has announced the collapse of negotiations with Western Union, pulls pin on due diligence process…
Western Union indicated its interest in buying the online foreign exchange business last November, suggesting it would pay $3.50 to $3.70 a share for the company.
Although OzForex – which last December separately announced a global rebrand as OFX – had granted exclusive rights to Western Union to make concrete its proposal, Western Union failed to meet the deadline for the bid and OzForex this week announced negotiations had ended.
The company’s board opened the kimono to Western Union during the exclusive due diligence process and must be now wondering what its international rival might do with the insights gleaned.
Investors certainly weren’t impressed sending the OzForex share price down from a close of $3.09 on Friday to $1.79 when the news broke on Monday, with 16 million shares changing hands. A more sober review of the situation saw the share price recover by 12.8 per cent on Tuesday, all the more remarkable as the overall share market fell by 2.9 per cent.
But shares still closed at $2.02 which was well shy of the $3.70 a share which had been the upper price Western Union had canvassed.
Nevertheless OzForex remains a significant player in the reasonably strong online international transfer market, and at the time Western Union launched its bid the directors made clear they still believed it could remain a strong independent business. Licensed by ASIC in Australia, the company also has operations in the US, New Zealand, Canada and the UK.
Offering international transfers, starting at $250, with fees that are considerably less expensive than the major banks, is what has built the business, though in the future it may face competition from emerging blockchain based value transfer platforms.
In its most recent half year report the company noted that in the six month period it handled $10 billion of turnover and made a $53 million net profit. It claimed 151,000 active clients with an average transaction value just north of $25,000. This week however it reined in market expectations for the full year somewhat after a sluggish December.
