With Bain Capital already selling most of its stake – it still holds around 6 per cent there aren’t many private-equity firms left that are likely to show interest. The prospect of a bidding war is unrealistic. KKR cutting its own offer by 8 per cent is unfortunate price-signalling for shareholders.
There’s also the fact that MYOB’s board changed its mind on the lower bid. Initially it said it wasn’t in a position to recommend this revised offer, before telling shareholders on Christmas Eve that they should vote in favour of it. Chairman Justin Milne’s explanation doesn’t exactly inspire confidence.
“Having regard to market uncertainty and the longer term nature of the strategic growth plan the Company has embarked upon.”
The two-month “go shop” provision built into the deal appears to tick the box that says the board is supposed to look after shareholders’ interests, but don’t expect them to work the phones over the Christmas-New Year break, or into the Australian summer, hustling for a better offer.
If there is a competing bid, it may come from a strategic rather than a financial investor. Any company looking to add accounting to its suite of software or cloud offerings could do worse than MYOB, especially given its solid brand name and track record in Australia and New Zealand. Yet its decidedly domestic focus also makes major international players – the Googles and Microsofts of the world – unlikely to bother.
So while KKR’s bid leaves money on the table, that doesn’t mean shareholders can count on getting it.