ACCC to probe MYOB’s Reckon acquisition

The ACCC has launched a formal inquiry into MYOB’s flagged $180m purchase of accounting software products from Reckon.

MYOB chief executive Tim Reed.

The ACCC has launched a formal inquiry into MYOB’s $180 million acquisition of accounting software products from Reckon.

The deal, unveiled last November, was at a hefty price of over four times book value and more than Reckon’s market value at the time of $136m.

This fact would raise alarm bells at the ACCC because rivals combining at big prices suggests they will have increased market power.

Reckon sold because it was unwilling to spend the extra funds to take its accounting software businesses to the cloud.

The divisions sold accounted for 50 per cent if its earnings.

Since the deal was unveiled, MYOB shares (MYO) have slid from a recent high of $3.79 on November 2 to $3.55 at today’s opening.

MYOB is acquiring the business in part to boost its adviser base, with Reckon supplying desktop software services to around 3,000 small- and medium-sized accounting firms.

Rival Xero (XRO) has since attacked the deal pointing to implementation problems.

Submissions are due on February 1 and the ACCC is due to decide on March 22.