KKR wins board support for $1.4b MYOB buyout

MYOB has entered into a scheme of implementation arrangement that will see the private equity firm acquire all shares it doesn't already own for A$3.40 apiece, according to a filing. The offer represents a 14% premium to MYOB's October 5 closing price and an EBITDA multiple of approximately 17x. The board said the offer is in the best interests of shareholders given market uncertainty and the company's long-term strategic growth plan.

KKR 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. After conducting due diligence, the GP reduced its offer to A$3.40.

MYOB's stock was trading at A$3.54 as recently as December 17. It fell 13.9% on December 20 in response to KKR's revised offer. The announcement of board support for the bid prompted a 14.6% rally on December 24, with the stock closing at A$3.29.

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.

Bain bought MYOB in 2011 for around A$1.3 billion. It made several partial exits, before and after the company went public at a valuation of A$2.59 billion in 2015. 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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• Topics
• Australasia
• Buyouts
• Technology
• Australia
• KKR
• Bain Capital Asia