ANZ withdraws from MYOB acquisition talks

ANZ announced its withdrawal from the deal – reportedly worth AUD 4bn (USD 2.7bn) in a filing but offered no reason. The move coincides with ANZ agreeing a AUD 4.9bn purchase of Suncorp’s banking business. That transaction will be supported by a AUD 3.5bn rights issue.

MYOB, a leading provider of business management, financial, and accounting solutions to small and medium-sized enterprises (SMEs), as well as enterprise and accounting practice customers, was described as strategically advantageous given ANZ’s desire to develop smaller corporate lending.

KKR has owned MYOB since early 2019 when it completed a take-private at a valuation of approximately AUD 2bn. It originally offered AUD 2.2bn, but the bid was revised downwards following further due diligence. The company was previously owned by Archer Capital and HarbourVest Partners and then by Bain Capital, which took it public in 2015.

MYOB provides business management software solutions to 1.3m SMEs in Australia and New Zealand. At the time of KKR’s acquisition, 82% of revenue came from SME solutions, including accounting, payroll, and tax. Other business lines involved selling practice software to accountants and enterprise software to medium and large-scale businesses.

As of year-end 2018, there were 628,000 online subscribers and annual revenue amounted to AUD 445.2m, of which 97% was recurring revenue. Underlying EBITDA and net profit for 2018 were AUD 190m and AUD 63.8m, respectively.

MYOB published a report last month that included the results of a survey of 2,000 SMEs. Companies are collectively spending AUD 2.6bn a year on digital tools, yet 57% of respondents said they were experiencing “bad digitisation” whereby digital apps and tools were not integrating with each other or not communicating at all.

MYOB’s early success has played a role in shaping the software investment thesis in Australia. Indeed, Andrew Gray, who participated in Archer’s acquisition of MYOB, went on to establish Potentia Capital, a B2B technology-focused investor, with Tim Reed, the company’s former CEO. Potentia recently closed its second Australia and New Zealand fund on AUD 635m.

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• Topics
• Australasia
• Trade sale
• Technology
• Australia
• KKR
• enterprise software