Morningstar | MYOB FVE Cut to KKR’s AUD 3.40 Bid Price Following Board Support for Takeover
We expect KKR’s takeover offer for narrow-moat-rated MYOB to succeed following the board’s decision to recommend the offer to shareholders. We have reduced our fair value estimate to the AUD 3.40 per share offer price as shareholders are now unlikely to be able to realise the stand-alone AUD 3.94 fair value. Although the KKR offer permits MYOB to seek superior offers until Feb. 22, 2019, we think it’s unlikely an alternative offer will emerge as KKR’s 19.9% shareholding complicates matters and no other offers have been made since the initial KKR bid last October. An alternative bid from a trade buyer is possible but unlikely as MYOB’s main competitors are focused on organic customer growth via the cloud. Alternative bids from financial buyers are also possible but likely to be deterred by KKR’s intention to sell into alternative bids above AUD 3.57 per share. Although KKR’s willingness to sell presents an opportunity for an unrestricted acquisition, we expect most potential financial bidders will be reluctant to buy from such a sophisticated investor which has just conducted due diligence on the company. MYOB plans to release its Scheme Booklet in mid-March 2019 with the Scheme meeting scheduled for April 16, 2019. We will provide our recommendation on the offer following the release of the Scheme booklet.MYOB Group is engaged in development and publishing of software and the provision of services for small and medium enterprises, including accountants in public practice. Co.'s operating segments comprise of SME Solutions, which provides business management software and services to small and medium enterprises; Practice Solutions, which provides business software and services to accounting professionals in practice; and Enterprise Solutions, which provides enterprise resource planning and human resource management software and services to medium and large enterprises.
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