OFX’s proposed $1.00-per-share takeover by Equals has lost its exclusivity after the UK bidder failed to reconfirm its proposal by the agreed deadline. Meanwhile, quarterly net operating income improved sequentially but remained well below the prior year, with enterprise revenue falling sharply and available cash declining.
- Transaction Process Deed terminated and exclusivity ended
- Non-exclusive discussions with Equals continue without certainty of a deal
- 2Q27 net operating income rose 3.1% quarter on quarter to $45.3m
- Net operating income fell 9.6% from the prior corresponding period
- Net available cash declined 25.7% quarter on quarter to $36.6m
Equals misses takeover reconfirmation deadline
OFX Group Limited (ASX:OFX) has lost the clearest framework around its proposed takeover after Equals failed to reconfirm its indicative $1.00-per-share all-cash offer by the 23 October deadline. The lapse terminated the Transaction Process Deed and ended exclusivity, although the parties remain in discussions on a non-exclusive basis.
That leaves shareholders with a proposal that is still possible but materially less certain. OFX said investors do not need to take action at this stage and stressed that there is no certainty a transaction will proceed. The announcement does not say that the $1.00 consideration has been withdrawn, amended or reaffirmed.
The development follows the initial $1 takeover offer, which the OFX board had intended to recommend subject to transaction conditions. Earlier September takeover talks had also continued without a completed Scheme Implementation Deed, making the missed reconfirmation a further test of whether the proposed deal can move from indicative terms to a binding transaction.
Sequential recovery fails to close annual revenue gap
OFX’s operating update provides no simple offset to the deal uncertainty. Net operating income rose 3.1% from the first quarter to $45.3m in 2Q27, but was down 9.6% from the prior corresponding period as low business confidence continued across most of its markets.
Corporate revenue was the strongest part of the quarter, increasing 6.9% sequentially to $28.4m. Cross-currency margins improved by three basis points to 0.6%, transaction volumes rose 1.4%, and transactions per corporate active client increased 2.0%. High Value Consumer revenue also returned to quarter-on-quarter growth, rising 2.8% to $13.3m.
Enterprise revenue and bad debts weigh on the picture
Enterprise revenue moved in the opposite direction, falling 31.3% from the first quarter to $2.8m after what OFX described as a strong 1Q27. Corporate active clients declined 5.0%, largely because of the continued runoff of Firma and OLS clients, although the decline excluding those lower-value clients was 0.9%.
Non-FX revenue remained a bright spot, reaching $1.0m after rising 31.0% sequentially and 178.9% from the prior corresponding period. Card, Pay by Card and Subscription revenue all grew, while the proportion of active NCP clients using multiple products increased to approximately 11.7%.
Cost reductions meet a tighter cash position
OFX expects underlying operating expenses of $85m to $87m for the first half, including $3.8m of bad-debt expense. That figure includes about $1.6m of adjustments to existing items that are not expected to recur and $1.1m of Consumer losses. The company said additional controls were implemented during the quarter and that the remaining bad-debt expense was in line with typical levels; none of the losses related to the cyber incident.
The group has executed approximately $15m of annualised cost reductions, predominantly in operating expenses, and continues to target positive operating leverage in FY27. Yet the balance sheet offers less room than it did three months earlier: net cash held fell 5.8% quarter on quarter to $63.3m, while net available cash after collateral and bank guarantees dropped 25.7% to $36.6m. The figures are unaudited and subject to external audit review, leaving the next audited half-year update to clarify how much of the cost and cash trajectory is durable.
Bottom Line?
The takeover now depends on non-exclusive negotiations while OFX works to turn sequential revenue improvement and cost cuts into a sustained recovery without further pressure on available cash.
Questions in the middle?
- Will Equals return with a reaffirmed, revised or withdrawn proposal, and will any revised terms differ from $1.00 per share?
- Can corporate and High Value Consumer momentum offset the sharp decline in Enterprise revenue?
- How much of the expected cost reduction will flow through to operating leverage as cash availability contracts?