OzForex opens books to Western Union

OzForex has agreed to allow Western Union exclusive access to conduct due diligence in connection with its takeover proposal. The company has agreed not to negotiate with others during the due diligence process, but can consider competing offers 'where failure to do so would be reasonably likely to constitute a breach of fiduciary or statutory duties by the OzForex Directors'.

With the share price jumping into the proposed $3.50–3.70 indicative range yesterday, to $3.55, investors had perhaps allowed themselves to hope that Western Union might increase its offer at this point, or that a competing bid might emerge. With neither of these things happening, the price has slunk back below the range, to $3.46, which is probably about right, with the possibility of a higher bid roughly offsetting the chances of the current offer falling over (it is still of course indicative and non-binding, etc etc).

The stock is up 3% since OzForex receives bid on 19 Nov 15 (Hold – $3.34), reflecting the greater perceived likelihood of the bid proceeding. The share price could fall sharply if Western Union walks away, so those with sizeable holdings might consider locking in some profit. For most, though, the best bet in these situations is generally to hang on and we think that's the case here. HOLD.

Note: Our Growth and Equity Income portfolios own shares in OzForex. You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by clicking here.

Disclosure: The author owns shares in OzForex.