Archer sues UK's Sage Group over MYOB deal

Sage was said to be in exclusive negotiations with MYOB's private equity owners Archer and HarbourVest Partners in August, but walked away from the deal at the eleventh hour. This enabled Bain Capital to purchase the asset for an estimated A$1.3 billion.

Sage was formerly said to have offered $1.4 billion for the asset, making it the frontrunner for the purchase given the premium to both Bain and KKR's bids. However, volatile market conditions that resulted in a weaker pound reportedly led the company to withdraw from the purchase process. More specifically, at the beginning of August, the company's share price stood at GBP2.76; when it confirmed the potential MYOB acquisition on August 17, Sage's stock was down 11.5% at GBP2.44. This decline meant the value of the acquisition could amount to more than 25% of Sage's market value, requiring a shareholder vote for it to go through.

Sources told media outlets that Bain's acquisition of MYOB is $100 million less than Sage's indicative offer, which has led Archer to file is claim.

In response, Sage released a statement denying wrongdoing: "Sage strongly rejects the claim, which it understands to be in the region of A$130 million, and will defend itself vigorously."

The MYOB deal is Bain's largest transaction in Australia to date. Bain's purchase price valued MYOB at approximately 11.3x the company's reported EBITDA in 2010.

Archer and HarbourVest purchased MYOB for approximately A$450 million (then $296 million) in January 2009.

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• Topics
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• HarbourVest Partners
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