A bargain-hunting investment consortium named Manhattan Software Bidco has offered around $443 million plus options in a takeover bid for Australia's leading accounting software brand, MYOB.
Although the standing offer is an all-cash bid of $1.15 per share, the potential acquirer, backed by Australian private equity firm Archer Capital and American investment firm Harbourvest, will up its offer to $1.25 should it become entitled to compulsory acquisition of MYOB shares and if debt financing conditions are waived.
The bid represents a 13 per cent premium on the average share price of MYOB over the past five days. MYOB shares have consistently hovered around the $1.00 to $1.50 mark for the past two years, peaking at just over $1.60 in July and closed last night at around $1.05.
The offer fell well short of an unsolicited approach from an undisclosed private equity firm offering MYOB $1.90 per share in February. The MYOB board rejected this deal on the basis that it was "inadequate" and "not in the interest of MYOB shareholders".
Cash-strapped institutional investors have already indicated interest in the Manhattan Software offer. Already, the bidder has claimed it can count on the support of 48 per cent of MYOB shareholders including Guinness Peat Group (which holds just over 16 per cent) and Colonial First State Global Asset Management (which holds around 13 per cent). Schroders Investment Management, which owns just under 10 per cent of MYOB, will accept the offer should the $1.25 per share price tag be met.
MYOB founder Craig Winkler is the company's largest shareholder, owning some 30 per cent of the company (over 108 million shares).
MYOB, primarily an accounting software business, recently paid $7 million to acquire local hosting provider SmartyHost to offer web hosting and domain services to its customer base.
According to its last half-yearly report to 30 June 2008, MYOB operations have remained focused on Australia. The company earned close to 80 per cent of its revenues from Australian customers, with a further 15 per cent from New Zealand and a mere 5 per cent from Hong Kong, Singapore, Malaysia, China and the United States. The company recently wrote-off $16.5 million of losses attributable to pulling out of the UK/Ireland markets after it sold its UK division to Wolters Kluwer for £35.5 million.
MYOB had not responded to requests for comment at the time of publication.