KKR reduces offer for Australia's MYOB
KKR has reduced its offer for Australian accounting software provider MYOB and is now willing to buy all the shares it doesn’t already own at a valuation of A$2 billion ($1.43 billion).
The private equity firm made an unsolicited offer of A$3.70 per share in October after building up a 19.9% interest in the company. This included a 17.6% holding purchased from Bain Capital for A$3.15 per share. The bid rose to A$3.77 in November and MYOB then granted information access so KKR could perform deeper due diligence. It has now revised the offer downwards to A$3.40, according to a filing.
MYOB’s stock dropped 13.9% on December 20 to close at A$2.90. KKR’s revised offer still represents a 14% premium to the price on October 5, when the private equity firm made its interest public.
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.
Bain bought MYOB 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, it received A$127.2 million of the proceeds from MYOB’s A$833.1 million IPO in 2015. The company went public at a valuation of A$2.59 billion. Bain completed sell-downs in February and December of last year, generating estimated proceeds of A$355 million and A$356 million, respectively. It still holds 6.1%.
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.
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