ASX-listed business software firm, MYOB (ASX: MYO), has labelled a takeover bid by Manhattan Software Bidco as opportunistic.
MYOB chairman, Simon McKeon, said the takeover attempt came at a time of global economic uncertainty, and urged its shareholders to take no action in relation to the proposed bid.
Manhattan Software, jointly owned by local private equity firm, Archer Capital, and global investment firm, HarbourVest Partners, announced its intention to acquire all outstanding MYOB shares on October 30 at $1.15 cash per share.
The offer price will be increased to $1.25 per share if Manhattan Software becomes entitled to proceed to compulsory acquisition of MYOB shares and debt financing conditions are satisfied or waived. Offer conditions include board recommendation and 50.1 per cent acceptance.
Manhattan Software said the offer is “attractive to MYOB shareholders and provides the certainty of cash consideration in an uncertain economic environment”. According to its bidder’s statement submitted to the ASX, Manhattan Software said MYOB shareholders that have indicated they will accept the offer once it is open represent 34 per cent of the outstanding shares and 48 per cent of the non-board member shareholdings.
Archer partner and Manhattan Software director, Andrew Gray, said the appeal of the cash offer was clearly evident given 48 per cent of non-board member shareholders had already indicated an intention to accept the offer.
However, McKeon responded with a statement recommending shareholders take no action in respect to the offer.
“This appears to be an opportunistic attempt to acquire MYOB at a time of global economic uncertainty and sharemarket volatility,” McKeon said.
“The conditional offer of $1.15 amounts to a premium of only 5.5 per cent on the volume weighted average price over the past three months. At $1.25, and assuming compulsory acquisition, the premium rises to only 14.7 per cent.”
McKeon said significant investment in MYOB over the past three years has strengthened its market position in Australia and NZ and resulted in excellent growth.
“MYOB has a very strong balance sheet, a high rate of recurring revenue and strong underlying cash flow. These factors make MYOB an attractive investment, especially in the current environment, and as disclosed recently by the company, MYOB’s trading performance and outlook remain strong,” he said.
“Reflecting this strength, MYOB has returned $0.24 per share so far this year and, subject to shareholder approval next week, will return a further $0.13 per share. These distributions total $0.37 per share of tax effective cash returns during the course of 2008.”
MYOB said its board will provide shareholders with a recommendation on the bid in due course, but urged them to take no action in the meantime in relation to the bid.
A MYOB spokesperson contacted by ARN said the company had no further information or comment at this point. MYOB’s Extraordinary General Meeting will be held in Victoria on Wednesday, November 5.
Manhattan Software said it intended to furnish MYOB shareholders with the relevant documentation in the week commencing November 10. The offer will be open for one month unless extended.