MYOB bid won’t rise: KKR

Kohlberg Kravis Roberts is sticking to its guns in its pursuit of MYOB, saying it won’t raise its $3.40-per-share takeover offer.

Duncan Niederauer, left, a former head of the New York Stock Exchange, with Shane Finemore, head of US hedge fund Manikay, which is involved in the MYOB takeover bid.

Kohlberg Kravis Roberts is sticking to its guns in its pursuit of MYOB, with the private equity firm saying it won’t raise its $3.40-per-share takeover offer.

MYOB told shareholders yesterday KKR had made its intentions clear in a letter to the takeover target’s chairman, Justin Milne. “KKR BidCo has today informed the directors of MYOB that the all-cash consideration of $3.40 per share under the SIA (Scheme Implementation Agreement) is its best and final offer, subject to KKR BidCo retaining its rights under clause 9.5 of the SIA,” the letter said.

The clause means KKR retains a matching right if MYOB’s management gets a better offer. According to the SIA, the private equity suitor must be given three business days to match a superior proposal before it can be recommended by MYOB’s board.

KKR has reshuffled its offer for MYOB a couple of times, with its initial tilt last November pitched at $3.70. It subsequently raised the offer to $3.77 to get access to MYOB’s books, then cut it down to $3.40.

While MYOB’s management eventually accepted the lower bid, it has led to discontentment among some shareholders, with US hedge fund Manikay Partners agitating for a better offer.

KKR’s revised offer did give MYOB’s management two months to find a superior offer, which proved to be fruitless and with KKR’s offer the only option on the table, the suitor is under no pressure to give in to KKR’s demand.

Manikay, run by former ASX director Shane Finemore, has raised its stake in MYOB to 13.6 per cent this week, picking up shares from the likes of HMI Capital and Fidelity.

Manikay can still stop the KKR deal if it increases its stake in MYOB to more than 15 per cent and can also potentially seek allies to create a blocking stake. Canadian-based Mawer Investment Management, another major MYOB shareholder, has also increased its stake from 8.5 per cent to 9.9 per cent.

The latest share movements point to an interesting tussle as MYOB shareholders gear up to vote on KKR’s bid next month after advisory firm Grant Samuel gave the acquisition its blessing.

According to the report, the full underlying value of MYOB lies between $3.19 and $3.69 per MYOB share, with KKR’s offer falling within the right range.

MYOB shares ended yesterday’s session flat at $3.33.