MYOB Group Limited’s [ASX:MYO] share price took a big hit this morning, shedding over 10% of its share price. The accounting software firm is currently trading at $3.02, down $0.36 from its previous close.
MYOB is a cloud-based business management solutions provider. It serves 1.2 million businesses across Australia and New Zealand by providing accounting, payroll, tax, practice management, CRM, job costing, inventory and other services. The company has a market cap of $1.99 billion.
What caused MYOB share price to nosedive?
MYOB provided an update on its discussion with the private equity firm KKR. In October, KKR made an unsolicited indicative and non-binding proposal to acquire all the shares it does not already own in MYOB, at an offer price of $3.70 per share by way of a scheme of arrangement.
Last month MYOB provided KKR with access to its information so that it could complete its due diligence after KKR increased its offer to $3.77 per share.
The price drop this morning comes on a price revision from KKR following the conclusion of their due diligence.
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In an announcement released by MYOB this morning, KKR revised its offer to $3.40 per share. The revised proposal is subject to the finalisation of a scheme implementation agreement and MYOB has advised it will expire at 5pm Friday, 21 December 2018.
The MYOB board has advised KKR it is not in a position to recommend the revised offer but will remain in discussion with the private equity firm regarding its proposal.
What’s next for MYOB?
MYOB posted solid financials the past financial year and is continuing to accelerate online growth. However, investors seem unimpressed with its rate of revenue growth, which has seen the share price fall 19.17% on the year.
Xero, one of MYOB’s largest competitors, has also put pressure on the accounting software firm. The rapid growth of Xero has certainly reduced MYOB’s market share in Australia and New Zealand, with the New Zealand based Xero looking to continue to expand further into overseas markets.
Reuters reported that MYOB said it would reject an offer at the new suggested price of $3.40 per share, from $3.77 at the beginning of November.
The MYOB acquisition would be the largest for KKR and add to its 10-strong portfolio of technology businesses in the Asia Pacific region.
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