Tyro confirms bank interest, NAB taps Bank of America

Tyro said it had received approaches from several parties expressing interest in a change of control transaction. Picture: NCA NewsWire / Kelly Barnes

The National Australia Bank is understood to have hired Bank of America to weigh an acquisition of Tyro Payments as rival Westpac also considers acquiring the business.

Westpac said in a statement to the market on Tuesday that it is in talks to buy Tyro, but there is no certainty that any transaction will result.

“An acquisition would strengthen Westpac’s small business proposition, enabling it to better support customers and grow merchant acquiring, particularly in hospitality and healthcare sectors,” Westpac, which has hired JPMorgan for a bid, said in a statement.

Tyro also said in a statement that it had received approaches from several parties expressing interest in a change of control transaction, but none were advanced or definite enough to warrant further disclosure.

DataRoom revealed on October 4 that a big four bank was understood to be running the ruler over Tyro Payments and last week the column reported NAB was looking.

The logic for a bank to take a look Tyro is that the big four banks need to stay ahead of the curve when it comes to payments technology.

ANZ has already launched a partnership with payments provider Worldline.

A payment technology business provides the opportunity to collect customer data while also gaining the soft technology that sits behind the payments business that it needs for transactions.

The deterrent in buying Tyro, though, is that technology is changing rapidly and Tyro’s payment machines are now in competition with more sophisticated technology provided by groups like Square.

DataRoom understands that some investors are prepared to sell out of the stock at $1.50 per share, but the offer that Tyro’s board rejected in recent weeks from private equity firm Potentia Capital was well below that at $1.27 per share or $658m.

Tyro listed at $1.36bn.

Tyro’s largest shareholder, Atlassian co-founder Mike Cannon-Brookes, has agreed to deal his 12.5 per cent stake, which he owns through his private company Grok Ventures, to Potentia, backed by former MYOB boss Tim Reed and ex-Archer Capital executives.

That is if an offer above $1.52 per share does not emerge.

Analysts at Morgan Stanley had suggested an offer of between $2 and $2.50 per share is the going rate for similar companies.

Shareholders bought in at $2.75 per share for the initial public offering in 2019, but some now want to cut their losses.

Shares in Tyro closed on Monday at $1.56.