MYO’s Shares Plunged On ASX After KKR Decreased Its Offer Price From $3.77 To $3.40 Per Share

Online business management solutions company, MYOB Group Limited (ASX: MYO) had received an unsolicited proposal from KKR & Co. L.P.(KKR) on 8 October 2018 for the acquisition of all of the remaining shares that KKR does not currently own in MYOB. At that point of time KKR had offered a price of A$3.15 per share, however, on 2 November 2018, KKR increased its offer price to $3.77 per share. Today (i.e., 20 December 2018) KKR has again changed its offer price to $3.40 per share, following the completion of due diligence and finalization of debt funding commitments. Following this news, the share price of MYOB Group decreased by 13.94 percent as on 20 December 2018.

The Revised Proposal by KKR is subject to the finalization of a scheme implementation agreement, and it will expire on 21 December 2018 (AEST 5:00 PM). As per the announcement MYOB Group’s Board has informed KKR that it is not in a position to recommend the Revised Proposal however it remains in discussions with KKR regarding its proposal. At this stage, the shareholders of MYOB group are not required to take any action in relation to the Revised Proposal. Currently, KKR is having an aggregate economic interest in MYOB of 19.9 percent.

In 2018 Investor day presentation MYOB confirmed its market leadership position in online subscriber growth in Australia and New Zealand as it has added over 200k online subscribers in the 12 months to September 2018. At the end of September 2018, the company was having online subscribers of more than 550k which is 60 percent higher than the previous corresponding period.

In the first half of FY 2018, the company’s revenue increased by 7 percent to $218mn as compared to the previous corresponding period. The company also reported Underlying EBITDA of $93 million in 1H 2018 which is 3 percent higher than the previous corresponding period.

In the second half of FY18, the company is expecting the revenue growth and EBITDA margins to be higher than 1H 2018. The company is expecting the full year 2018 revenue growth to be more than 8 percent higher than last year. Further, the company is expecting the Underlying EBITDA margin to be in the range of 42% – 44% and its free cash flow to be more than $100m in FY 2018.

During the first half of FY 2018, the company launched a number of innovative new products and connected services to SMEs and Accountants, including the release of new Compliance tools such as Online Assets in Client Accounting, plus enhancements in Online Tax, Portal, Dashboard, Essentials, Connected Ledger and MYOB Advisor.

In the last six months, the share price of the MYO increased by 20.79 percent as on 19 December 2018 and traded at a PE ratio of 34.920x. MYO’s shares traded at $2.900 with a market capitalization of circa $1.99 billion as on 20 November 2018 (AEST 3:30 PM).


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