Archer takes $1.2b for MYOB
A LATE twist in the bidding war for the accounting software provider MYOB has led to the US private equity fund Bain Capital prevailing in a $1.2 billion deal. A competitor, the British-listed software provider Sage Group, had been leading a pack of rival bidders – including private equity giants Kohlberg Kravis & Roberts and Hellman & Friedman – with a $1.35 billion offer.
It is understood Sage’s bid fell through late last week after falls in its share price – hammered by the broad sharemarket selloff in Europe – meant the value of the MYOB transaction would now exceed 25 per cent of Sage’s market capitalisation. The deal would have required the lengthy and uncertain process of a shareholder vote, which prompted MYOB’s owner, Archer Capital, to look elsewhere and accept a bid worth 10 per cent less.
It is still a hugely profitable deal for Archer. The acquisitive private equity fund bought MYOB in February 2009 for about $500 million, and then boosted earnings by stripping out costs, raising prices and aggressively growing its customer base. ”We doubled the profitability. We basically achieved the three or four things we set ourselves before we acquired it … and we had a lot of inquiry from potential buyers,” an Archer partner, Peter Wiggs, said, explaining the rationale for the sale.
The deal is understood to have been valued at a multiple of 11.3 times earnings before interest, tax, depreciation and amortisation. MYOB is used by more than 1 million small- to medium-sized enterprises in Australia and New Zealand.
Read more: http://www.smh.com.au/business/archer-takes-12b-for-myob-20110821-1j4pf.html#ixzz1VhQMXDGK