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Western Union Makes Informal Bid to Acquire OzForex Group

Money transfer company Western Union Co.WU has made an informal bid to acquire Australia-based online rival company OzForex Group Ltd.

Western Union has offered A$3.70 per share, which represents a 42% premium above OzForex's closing stock price on Wednesday. The deal has been valued at A$888 million ($632 million) in cash.

This move by Western Union indicates its effort to expand in Australia, one of the biggest markets for remittance.

Acquiring OzForex Group will also make economic sense to Western Union since the Australian dollar has fallen around 25% against its U.S. cousin since mid 2014. A falling Australian dollar has therefore made local companies more attractive to overseas buyers.

The news came just a day after Western Union announced its collaboration with social media communication site -- WeChat.

These measures reflect the company's determination to grow its presence in the digital space, which is transforming the way remittances are made across the globe. Western Union which mostly does its business via physical agent locations is now growing its digital capabilities at a rapid pace in order to remain at the forefront of a changing industry that is increasingly adopting modern technology.

The company is trying to grow inorganically since the growing cross-border price pressure is affecting long-term organic revenue growth. The company's inorganic strategy has already been proven by its Travelex and Custom House acquisitions in 2011 and 2009, respectively.

Western Union carries a Zacks Rank #3 (Hold). Some better-ranked players in the space are Fiserv, Inc. FISV , Heartland Payment Systems, Inc. HPY and Total System Services, Inc. TSS . Each of these stocks carries a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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