MYOB (MYO) entertain KKR takeover bid
Stock
MYOB (MYO) $3.56 as at 8/10/2018
Event
The accounting software company has jumped higher this morning on news that private equity company KKR purchased a further 17.6% stake from private equity firm Bain Capital and lobbed a bid for the remaining shares on issue at $3.70. KKR is now the biggest shareholder in MYOB with 19.9% of shares on issue and the bid represents a 24% premium to Friday’s close price of $2.98. Interestingly, the Bain Capital holding was originally placed through an auction of the company that KKR also bid for back in 2011.
The MYOB share price has come under pressure over the past 12 months, falling 22% from its high back in November 2017 to Friday’s close, in contrast, competitor Xero (XRO) rose 55% over the same time period. A miss on growth targets and a failed takeover of competitor Reckon caused the market to turn negative MYO while short sellers attacked the stock. Now KKR wants to revamp the company, whilst also using the current management team to set a strategy before the takeover is finalized.
MYOB (MYO) Chart
Market Matters Take/Outlook
Shares are still trading at around a 4% discount to the KKR bid suggesting there is some way to go in the takeover process. In reality, a 24% premium to market by suitor that already owns ~20% of the company is unlikely to run into much trouble unless there are underlying problems with the balance sheet at MYOB.
