MYOB recommends KKR's lower buyout offer
Accounting software business MYOB Group has recommended shareholders accept US private equity giant KKR & Co's reduced $2 billion buyout bid.
On Thursday, KKR sliced its $3.77-a-share offer price by 10 per cent after conducting due diligence and completing debt-funding commitments.
If completed, KKR, which already owns 19.9 per cent of MYOB, will buy the remaining shares for $3.40 a share. On Friday, MYOB shares closed at $2.87.
The offer price assumes no dividend for the full year will be paid. Shareholders will be able to vote on the proposal on April 16.
When details of a potential buyout were revealed in October, MYOB's share price jumped from $2.98 to $3.55 but fell on December 20 to $2.90 when the offer was cut.
MYOB chairman Justin Milne, who last week said the company was not recommending the new price to shareholders but was still reviewing the offer, described the proposal as in shareholders' best interests considering market uncertainty and the long-term growth plans for the business.
Once the dominant provider of accounting software to small and medium-sized businesses in Australia, MYOB has been outpaced in recent years by cloud-based accounting software provider Xero.
Since KKR's initial bid in October, global technology companies like Facebook and Alphabet (owner of Google) have seen significant share price falls due to regulatory concerns and privacy and market dominance.
“The unique provisions of the agreement with KKR provide a level of certainty for our shareholders and gives us the opportunity to ensure a full and fair market testing of the revised proposal over the implementation period," Mr Milne said in a statement on Monday.
The directors have now unanimously recommended the shareholders vote on the scheme of arrangement.
MYOB is able to look for superior proposals until February 22, however, in the absence of a better deal the scheme of arrangement will complete on May 3.
Fiscal 2018 results, confirmed in the announcement, are expected to show revenue growth of 7 per cent, research and development spending of 19 per cent of revenue and an underlying earnings (before interest, tax, depreciation and amortisation) margin of 42 to 43 per cent. Free cash flow is expected to be above $100 million.
MYOB listed on the Australian Stock Exchange in 1999.