On 8 October 2018, MYOB Group Limited (ASX: MYO) announced that Bain Capital Abacus Holdings, L.P. has sold 103,951,106 shares, which represents around 17.6 percent of the issued share capital of the Company to an affiliate of KKR & Co. L.P., at a price of A$3.15 per share. Together with existing interests in the Company, KKR is currently having an aggregate economic interest of 19.9 percent in MYOB. Following this news, the share prices of the company increased by 19.128 percent as on 8 October 2018.
An unsolicited proposal was also received by MYOB from KKR for acquiring all the remaining shares by way of a scheme of arrangement and the Proposal is stated to be a preliminary, non-binding indication of interest. The price of A$3.70 cash per share represents a premium of 24% to the closing share price of A$2.98 per share on 5 October 2018. The Proposal is subject to several conditions which include completion of confirmatory due diligence to the satisfaction of KKR, obtaining debt financing on acceptable terms.
The proposal is also subjected to the execution of definitive transaction implementation documentation on terms acceptable to KKR which includes the unanimous recommendation of the MYOB's Board of Directors, break fee and conduct of business provisions, Customary exclusivity and Customary conditions precedent such as no material adverse change, no prescribed occurrences and court and shareholders’ approval. The board of the company has started evaluating the Proposal and will keep the market informed in accordance with its continuous disclosure requirements. The Board of the company is looking after the best interests of all shareholders. At this stage, MYOB shareholders are not required to take any action in relation to the Proposal and there is no certainty that the Proposal will result in a transaction.
In the first half of 2018, the online subscribers of the company surge to 492,000 from 306,000 subscribers in June 2017. The revenue of the company increased by 7% compared to last year to $218 million. However, the organic revenue is lower than prior years due to the impact of the price led migration campaign in 2H17. This impact will reduce overtime and the company reaffirms guidance of greater than 8% growth in FY 2018. The underlying EBITDA of the company increased by 3% compared to last year to $93 million and Statutory EBITDA increased by 1% to $88 million. The Net profit after tax amortization reduced by 6%. The company declared an interim dividend of 5.75 cents per share in 1H18. The company is expecting underlying EBITDA margin to be in between 42% and 44% in FY 2018 and the company is expecting a free cash flow of more than $100 million in FY 2018.
The company is entering into a 2-year period of accelerated investment with a compelling case that leverages company’s momentum in online subscriber growth, recognizing that now is the right time to invest to capture further market share. The company’s investment plan is focusing on two key areas i.e., $50 million MYOB platform acceleration and $30 million Sales and marketing investment. On 24 August 2017, MYOB initiated a share buyback of up to 5 percent of the Company’s issued capital. Since then, the company has acquired more than $38 million in shares up until the close of 1H18. Together, the dividend and buyback represent a total of $69 million of capital returned to shareholders in 1H18, and more than $238 million returned to shareholders since listing in 2015.
In the past three months, the share prices of the company decreased by 0.33% as on 5 October 2018. MYO’s shares traded at $3.550 with a market capitalization of circa $1.76 billion as on 8 October 2018 (AEST 4:00 PM)
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