OzForex confirmed Thursday that global payment services provider Western Union (NYSE: WU) has launched an indicative conditional proposal to acquire 100 per cent of its shares.

The preliminary cash offer for each OzForex share is valued between $3.50 to $3.70, bringing the takeover target up to $888 million – a near doubling of its float price of $480 million just two years ago.

Prior to going public in 2013, OzForex was majority-owned by external institutions, including Macquarie, which bought a 51 percent stake from the founding investors for an undisclosed sum in 2007, and is now acting as its defence advisor alongside Clayton Utz for the takeover bid.

Fast-forward two years and current chief Richard Kimber just late last week told Business Insider that the online currency transfer company was ready to jumpstart a global rebrand – starting with its name change to OFX.

“In the US they don’t really know what forex is. I think forex is a form of Australian colloquialism. OZ and Forex together makes sense in Australia but makes less sense the further away from Australia you get. They don’t know what we’re talking about,” Kimber told BI.

“So instead of being OzForex, USforex, it will be one global brand which will be OFX.”

OzForex recorded a 34 percent increase in turnover from $7.5 billion in half-year 2015 to $10 billion in half-year 2016. Thirty percent of its $53 million revenue in the latest half year results flowed from Australia and New Zealand.

However, statutory profit was down six percent due to a series of one-off costs, including a proposed acquisition which never got the green light.

Highly credible bid: analysts

OzForex was created in 1998 by Matt Gilmour as a foreign exchange information website before it transitioned to a transactions platform, a move made possible by Howard government reforms to capital reserves.

According to a 2013 BRW report, Gilmour had seen a demand for better deals in currency transfers, particularly for SMEs, who were subjected to the day’s rates.

Today, the company records over 500,000 fund transfers, with $13.6 billion in foreign exchange transactions last year. Its net profit for fiscal 2015 was $24.3 million, and its client base, which include ING Direct, Macquarie International Money Transfers and Travelex International Payments, continues to grow.

OzForex company also benefits from a low-cost model that is highly accessible and easy to use, factors that could help it go the distance especially when it looks to make a bigger impact overseas. According to The Motley Fool, the company also has a negative debt-to-equity ratio and strong cash flows. Its popular prepaid travel card, however, will close on Nov. 30 despite being named one of the best travel cards by Canstar.

While some analysts say OzForex’s price earnings ratio is too expensive, at least for domestic suitors, the bid by Western Union is believed to be highly credible given the New York giant's US$10 billion market cap.

“At the mid point, the implied price to earnings is 31.9 times financial year 2016 on consensus estimates. Pricing is clearly attractive," noted Deutsche Bank analyst David Summerfield, as reported by the AFR.

The premium also looks to be sufficiently high so that there may be no competing bids, but the latest report by The Australian notes that US-based Euronet Worldwide, Canada's XE.com and UK's HiFix are among parties that may launch a rival bid for OxForez. PayPal Australia and American Express could also be potential bidders.

Western Union reported a total revenue of US$5.6 billion in 2014, and operates globally, including in more than 222,000 locations in the Asia Pacific region. According to Bloomberg, it has spent US$1.1 billion on five acquisitions in the last five years.

On Tuesday the company announced an agreement with Tencent Holdings’ WeChat, a competitor of social communication platforms WhatsApp and Viber, that will give U.S. WeChat users the ability to send money cross-border to 200 countries and territories.

Meanwhile, OzForex is evaluating the offer, with its directors stressing in a statement that there is “no certainty that the Indicative Proposal [by Western Union] will result in a binding offer”.

If the deal goes through, Matt Gilmour could take home over $34 million.

OzForex shares closed at $2.60 on Wednesday. It rose to $3.41 at around 11am AEDT.

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