Fintech provider Tyro Payments has knocked back a $693 million takeover bid, with existing shareholders describing the bid as ‘opportunistic’.
Tyro, which offers payment and banking services to e-commerce and in-store trades, is the largest provider of EFTPOS services in Australia outside of the big four banks. It sees the new takeover proposal emerging from a consortium headlined by private equity firm Potentia Capital, whose previous investment portfolio includes omni-channel payment products focused Linkly, B2B and B2C eCommerce platform provider Commerce Vision and HR/Payroll software pioneers Ascender.
Coming as Tyro has seen shares drop 66 percent over the year, the non-binding indicative proposal indicated plans from Potentia Capital to acquire 100 percent of Tyro Payments at a value of $1.27 per share.
It came as Potentia Capital had entered into a Voting and Acceptance Deed with Tyro Payments’ primary shareholder Grok Ventures – the investment company overseen by Australian entrepreneur Mike Cannon-Brookes. The deed, Potentia said, determined that Grok Ventures would accept a takeover bid made by Potentia or vote in favor for a scheme of arrangement proposal from Potentia at a price of $1.27 per share.
“We believe Tyro requires a level of business transformation that can be best undertaken under private ownership,” Potentia Capital wrote in its proposal, “Potentia Capital is uniquely placed to assist Tyro deliver this transformation given our strong experience in B2B software and payments, track record of helping Australian software businesses scale, and the significant capital and resources Potentia can bring to support organic and inorganic growth.”
In rejecting the takeover attempt, Tyro asserted that the proposal was “materially below Tyro’s fundamental value and highly opportunistic given the Offer Price is substantially below where Tyro’s share price has traded in the past 12 months”, a sentiment reaffirmed by Tyro shareholder and QVG Capital portfolio manager Chris Pruny.
“It’s an opportunistic bid,” said Pruny, “And an easy one for the board to reject at that price.”
“Tyro doesn’t have and has never had a revenue problem. It does, however, have an outrageous cost base and that’s the opportunity for the bidder.”
“The Board has considered the Indicative Proposal including with the assistance of its financial and legal advisers and unanimously determined the Indicative Proposal significantly undervalues Tyro and, as such, is not in the best interest of shareholders as a whole,” the board for Tyro Payments said in a statement, “The Board has therefore determined to reject the proposal in its current form.”
Tyro’s shares, which last closed at 98¢, saw a 25.5 percent increase to hit $1.24 per share in response to the failed bid as the market continues to speculate the intervention of a strategic bidder.
The full details of the bid and response from Tyro Payments can be found here.
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