MYOB Group Share Price Down by 6.37% after Dumping $180 Million Deal

Titan software company MYOB Group Ltd [ASX:MYO] have seen their shares plummet by over 6% in early afternoon trading this Thursday.

Its share price is sitting at $2.82 at time of writing, a 52-week low for the fallen tech stock.

Earlier the company told us it had dumped a $180 million deal to acquire the Australian and New Zealand assets of Reckon’s Accountant Group.

Why is the  MYOB share price going down?

The deal had a six-month sale and purchase agreement, according to MYOB. The regulatory process had taken longer than anticipated, and both parties could not come to an agreement on desirable terms to extend the contract.

The software giant’s Chief Executive, Tim Reed, said further potential delays involved both the Australian Competition and Consumer Commission and New Zealand’s Commerce Commission, and had caused indecision in Reckon. Potential negative impact on its trading was a key concern.

What does the future hold for MYOB?

Mr Reed has done his best to comfort disgruntled shareholders, stating:

Whilst the acquisition will not complete as planned, we are excited about the opportunity to accelerate the organic growth in our business.’

Mr Reed also communicated that he was confident MYOB’s underlying earnings margins during this investment period would be above 40%.

The company will now be accelerating the pace of its share buy-back program, joining a long list of Australian companies who participate in this stock exchange technique.

Today’s sharp drop could be attributed to negative media coverage, and the fallout from the broken deal, but the 52-week low could be a greater cause for concern.

Best to stay vigilant.

Regards,

Ryan Dinse,
Editor, Money Morning

PS:Looking for more appealing options for your stock portfolio? Top Aussie stock picker Sam Volkering has revealed four Aussie stocks he believes could be the top performers this year. Claim your free ‘The Four Best ASX Stocks for 2018’report here.


Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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