Waiting to see if $2b bid adds up

ACCOUNTING software group MYOB says there is still “a lot of water to go under the bridge” before a proposed $2.2 billion buyout goes ahead.

The Australian technology heavyweight is being wooed by US private equity titan KKR & Co, which has lifted its stake in the company to almost 20 per cent. KKR has snapped up almost 104 million shares — representing about 17.6 per cent of MYOB — taking its holding to 19.9 per cent. It bought the shares from fellow US private equity house, Bain Capital, at $3.15 each.

KKR, previously known as Kohlberg Kravis Roberts & Co, is now offering to buy the rest of the group’s shares at $3.70 each. Shares in MYOB — an acronym for Mind Your Own Business — surged on the revelation yesterday, closing 19.1 per cent higher at $3.55.

The takeover offer values the Australian software company at $2.2 billion, or $2.6 billion including debt.

Chief executive Tim Reed said the board had received the bid over the weekend.

“We’re working with our advisers to consider the terms of the non-binding offer and will keep the market informed as and when decisions are made,” he said.

The group’s commitment was to “deliver exceptional shareholder value and therefore to consider any reasonable proposal”, Mr Reed said. “There is a lot of water to go under the bridge between this proposal and any potential resulting transaction,” he said.

“Early indications are that in KKR we have gained a supportive and interested shareholder who is confident in the company’s strategy and people, as Bain were and we expect will continue to be with their remaining shareholding.”

Mr Reed said that while the board and its advisers scrutinised the proposal, it would be business as usual.

KKR has dubbed its proposal as a “preliminary, nonbinding indication of interest”. The $3.70 price is a premium of 24 per cent on the closing price last Friday of $2.98.

Bain still has almost 36 million MYOB shares — a stake of about 6.1 per cent. The takeover offer is subject to conditions, including the completion of due diligence by KKR.

The private equity house has said that for the deal to go ahead, it must also secure debt financing on acceptable terms and the unanimous backing of MYOB directors.

MYOB advised shareholders not to take any action.

WE’RE WORKING WITH OUR ADVISERS TO CONSIDER THE TERMS OF THE NON-BINDING OFFER