Investment firm KKR & Co. has begun a $1.24 billion takeover bid for MYOB Group, an Australian accounting software provider.
In the 1990s, MYOB had a significant presence in the United States, and over the years split its focus into distinct Australia and U.S. divisions. However, in 2005, Acclivity acquired MYOB’s U.S. operations; today, MYOB operates solely in Australia.
KKR & Co already owns one-fifth of the accounting software company, and the bid is an effort to add to its collection of technology businesses in the Asia-Pacific region. KKR dug its stake in by paying $232 million for 17 percent of MYOB from its biggest shareholder, an affiliate of private equity firm Bain Capital, leaving that affiliate with a remaining 6.1 percent. KKR now owns 19.9 percent of MYOB shares.
A spokeswoman for KKR confirmed to Reuters that KKR would pay $2.63 (A$3.70) per share for the remaining 80.1 percent of the company not currently owned by the firm, and declined to comment further.
MYOB has lost market share in recent years as accounting software Xero has become successful in Australia and New Zealand. Both are publicly traded companies in Australia, and together they serve more than 80 percent of the local market, according to Wilson’s Equity Research. However, the research also shows that Xero's growth has outpaced MYOB’s, and Xero’s market value, at $4.89 billion (A$6.88 billion), is three times MYOB’s.
When MYOB was active in the United States, it was a significant competitor to U.S. market giant Intuit and its flagship QuickBooks product. JPMorgan analysts said that KKR’s existing stake will make it difficult for Intuit or Sage Group, which tried to buy MYOB in 2011, to compete for an offer.
"With 19.9 percent of the register, KKR effectively own a blocking stake in the company," JPMorgan analysts said in a note to Reuters. "We think this could be enough of a deterrent for a potential interloper."
