Is the $2 billion private equity offer from KKR for accounting software business MYOB Group about to fall over?
The question arises from a letter yesterday from MYOB’s new big shareholder, a New York based fund called Manikay Partners in which MYOB was urged to withdraw its support for the KKR offer.
Earlier this week Manikay raised its stake in MYOB to 9.99% and in a letter made public yesterday told chairman Justin Milne that the KKR offer – “negotiated under significant market duress in late December” – should no longer be supported.
“We believe this deal significantly undervalues the company,” Manikay said. “Our valuation of the company, which we are happy to discuss with the board and with our fellow shareholders, is well in excess of $4.00 a share.”
Manikay said MYOB’s management was “capable and willing to execute on the wonderful opportunities that exist” for the company’s growth as a stand-alone business.
The New York group said that since the software firm had accepted KKR’s offer more than two months ago, “equity markets have rallied significantly, and the financing markets have normalised, such as that a sale of the company at $3.40 a share does not represent a fair and reasonable deal for company shareholders.”
In the midst of the big market slide (especially in tech shares) last December, KKR dropped its offer price for MYOB from $3.77 a share to $3.40 a share.
MYOB’s board accepted the reduced bid in the absence of a better offer. KKR already owns nearly 20% of the company.
Now Manikay reckons there is no longer a sense of emergency and wants MYOB to abandon the KKR recommendation and hold out for a higher price.
In a market update published with the Manikay letter, MYOB said its board “continues to unanimously recommend the proposal, subject to no superior proposal being forthcoming” and subject to the deal being supported in an expert’s report assessing the takeover.
With MYOB’s board rejecting that appeal MYOB’s shares fell 0.3% to $3.39 on the ASX yesterday.
MYOB said the independent expert’s report and scheme of arrangement booklet is expected to be sent to shareholders in the next few weeks. MYOB shareholders are scheduled to vote on the scheme of arrangement deal on April 17.
