KKR makes $1.5b bid for Australia's MYOB

Bain, which took MYOB public at an implied valuation of A$2.59 billion in 2015, sold a 17.6% holding to KKR for A$3.15 per share. This took the latter’s aggregate economic interest in the company to 19.9%. KKR then proposed to acquire MYOB outright for A$3.70 per share in cash through a scheme of arrangement. The office price represents a 24% premium to MYOB’s October 5 closing price of A$2.98. As of midday on October 8, the stock had risen 18.6% to A$3.53.

Bain continues to hold a 6.1% stake in MYOB. It bought the company from Archer Capital and HarbourVest Partners in 2011 for around A$1.3 billion. Having taken money out of the business through a retail note issue in 2013 and a debt refinancing in 2014, Bain received A$127.2 million of the proceeds from MYOB’s A$833.1 million IPO. The private equity firm completed sell-downs in February and December of last year, generating estimated proceeds of A$355 million and A$356 million, respectively.

MYOB provides business management software solutions to more than 1.2 million small and medium-sized enterprises (SMEs) in Australia and New Zealand. More than 60% of revenue comes from SME solutions, including accounting, payroll and tax, with 21% coming from practice software provided to accountants, 16% from enterprise software sold to 8,000 medium and large businesses, and 2% from payment solutions. It introduced the payments vertical through the acquisition of Paycorp in 2017.

As of year-end 2017, MYOB had 618,000 paying SME subscribers, up 6% year-on-year, while the number of online subscribers rose 60% to 399,000. As recently as 2012, the company had just 33,000 online subscribers. Revenue reached A$416.5 million in 2017, up from A$370.4 million a year earlier. Over the same period, EBITDA rose 11% to A$182.2 million and net profit increased 10% to A$101.6 million.

The KKR proposal is subject to completion of confirmatory due diligence, obtaining debt financing on acceptable terms, and unanimous support from the MYOB board, according to a filing.

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• Topics
• Australasia
• Technology
• Buyouts
• Trade sale
• Australia
• KKR
• Bain Capital Asia