Tyro (ASX: TYR) plummets over 15% as Potentia withdraws from takeover discussions

Highlights:

• Tyro Payments Limited (ASX: TYR) announced Potentia has chosen to withdraw from takeover discussions.
• In the last four months, TYR’s board, along with Potentia, has been working together to complete the proposal.
• In its latest FY23 earnings guidance, TYR’s gross profit was upgraded to be between AU$192 million to AU$194 million.

Technology-focused and values-driven group provider of payment solutions to Australian businesses, Tyro Payments Limited (ASX: TYR) decreased 15.309% and was trading at AU$1.300 on Monday, 22 May 2023, at 3:50 pm AEST after it updated its long-term suitor, Potentia Capital Management Pty Ltd has chosen to withdraw from takeover discussions.

Let’s look at the ASX financial stock- TYR’s latest update.

On Monday, TYR announced that its board had been working with Potentia in the best interests of TRY’s stakeholders throughout a four-month period this year to complete the proposal.

However, Potentia has decided to withdraw from discussions and informed TYR that it does not wish to go ahead with a proposal to acquire the company. Therefore, all discussions with Potentia pertaining to a possible change of control has been stopped.  

Potentia’s decision to step back came after TYR allowed them due diligence, along with extensive and advanced negotiation to material commercial terms. Further, TYR got engaged with regulators to comprehend the difficulties, along with the expected timespan, to conclude a transaction associated with the proposed private equity ownership of an ADI. 

TYR also worked with Potentia to advance processes that could possibly address regulatory requisites to decrease risk to TYR by giving elevated confidence of conclusion in a reasonable timespan.

Last week, TYR released its FY23 guidance, wherein gross profit was upgraded to be between AU$192 million to AU$194 million. EBITDA was upgraded to be between AU$41 million and AU$43 million. The company also updated last week it now provides Tap to Pay on iPhone to accept contactless payments.

In its 1H FY23 ended 31 December last year, TYR’s transaction value grew 37% to AU$21.7 billion compared to pcp. It was steered by a 9% rise in TYR’s merchant base to 66,884 merchants, with a 15% rise in consumer applications obtained in the reported period to 8,473 applications.

In the given period, total revenue (on a normalised basis) grew 45.2% to AU$ 216.6 million, with payments revenue elevated by 43.5% to AU$209.4 million. The rise in payments revenue was steered by the 371% increase in transaction value. The company’s statutory net profit stood at AU$1.1 million, along with a positive cash flow of AU$0.6 million.