Investors pan ANZ’s MYOB deal
Critics question logic of plan
ANZ’s potential $4bn-plus purchase of accounting technology firm MYOB has triggered fierce investor criticism, amid questions about the acquisition’s logic and a notable move into non-banking businesses.
ANZ on Wednesday confirmed talks with private equity behemoth KKR to buy MYOB, as part of a plan to bolster its presence in small business banking and increase its customer engagement through technology.
While the bank said discussions with KKR about a potential MYOB purchase were ongoing and the parties were “yet to reach agreement”, the setting up of a nonoperating holding company structure by ANZ lays the groundwork for a deal.
MYOB is a provider of business management, financial and accounting solutions for small and medium businesses and enterprise and accounting practice customers.
“ANZ will make an announcement to the market if the negotiations are successfully completed and an agreement is entered into,” the bank said. The deliberations around the MYOB deal come as ANZ – led by chief executive Shayne Elliott – seeks to step up in the business banking and lending market by growing market share while also getting access to a technology platform that provides deeper engagement. That comes against the backdrop of a slowdown in the home loan sector as interest rates sharply rise.
Sources close to the transaction said ANZ negotiations with KKR over MYOB were at an advanced stage and the bank’s board was due to further discuss the mooted purchase when it next meets.
A transaction may be sealed as early as this week, but requires the green light from the Australian Competition & Consumer Commission and the New Zealand Overseas Investments Office.
Bank investors were, however, highly critical of ANZ’s proposed acquisition and move into the technology sector. ANZ shares closed 1.2 per cent lower at $22.43, bucking a 0.2 per cent gain on the ASX 200.
WAM Leaders lead portfolio manager Matthew Haupt said MYOB was “not an amazing growth business”.
“I really struggle to see the thought process here around the bank’s focus, in what could be a trying period over the next six-to-12 months,” he said. “Is the timing right at the moment, if at all?”
Opal Capital Management‘s Omkar Joshi said it is difficult to see how the acquisition of a non-core business will add value to ANZ.
Others served up a harsher verdict on ANZ’s slated acquisition. “It’s just another disaster, every time they try something like this it’s a failure,” said a banking analyst, who declined to be named.
KKR acquired ASX-listed MYOB in 2019 in two phases for about $2.4bn.
MYOB posted after-tax losses of $6.5m in 2020 narrower than the $12.9m loss in 2019, the latest accounts lodged with the corporate regulator show.