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Private equity giant KKR slices bid for MYOB
By Cara Waters
US private equity giant KKR has sliced almost 10 per cent off its $2.2 billion bid for MYOB, sending shares in the accounting software platform down 14 per cent.
MYOB last month opened its books to KKR after it sweetened its bid to $3.77 a share, up from its initial offer to buy the 80 per cent it did not already own at $3.70 a share.
MYOB CEO Tim Reed.Credit: Josh Robenstone
However, after completing its due diligence and finalising debt-funding commitments, KKR on Thursday dropped the offer price to $3.40 a share, valuing MYOB at $2 billion.
MYOB's board has informed KKR that it is not recommending the revised offer, but the companies remain in discussions.
Once the dominant provider of accounting software to small and medium-sized businesses in Australia, MYOB has been outpaced in recent years by cloud-based accounting software provider Xero.
Since KKR's initial bid in October, shares of global technology players like Facebook and Google owner Alphabet have fallen sharply amid concerns about incursions on privacy, sparking a sell-down across the broader sector.
Xero's share price has dropped from $48.84 to $38.53 amid a 10 per cent decline on the Australian sharemarket. And credit markets have raised the price of corporate debt amid expectations of a rate hike, making it more expensive for firms like KKR to carry out leveraged buyouts.
KKR declined to comment on the revised bid.
A well-placed source said KKR was a long-term investor and so it wasn't necessarily a straightforward conclusion that its decision to cut the offer was just due to market moves.
"KKR understands it is a highly competitive market and MYOB is part way through a significant transformation, which will require heavy investment," the source said.
The source also noted that "sophisticated investor" Bain Capital, which had two directors on MYOB's board, sold its 17.6 per cent stake to KKR for $3.15 a share in October.
"It might be opportunism based on that move down in tech shares," CMC Markets chief strategist Michael McCarthy said. "The reality is, when you make a takeover bid you see a lot of value above and beyond the price you bid at."
Before KKR entered the fray, MYOB was trading at $2.98 a share and the accounting software platform had not traded above $3.40 a share since January 2018. Its shares closed 13.95 per cent weaker at $2.90 on Thursday.
The revised offer is open until 5pm on Friday.
with Reuters