THE Sydney-based private equity firm Archer Capital has lobbed a $487 million takeover bid for MYOB and bypassed the board of the Australia's largest listed software firm by mustering the support of several of its key shareholders.
The bid could be the first of a wave of takeover activity started by the slump of the Australian dollar and big falls in the share prices of local companies.
Ten months after the MYOB board rejected a $1.90-a-share bid from Archer, the private equity firm returned yesterday with a substantially lower $1.25-a-share offer - but also the crucial support of four of accounting software firm's key institutional investors.
"The business a year ago was a very different to the business today," said Archer partner Andrew Gray, in an attempt to justify the lower bid.
He said a recent profit downgrade by MYOB, the payment of a 24c capital return and sale of the company's European operations led to the lower offer.
Despite MYOB's chairman, Simon McKeon, urging shareholders to take no action and calling the bid "opportunistic", the Archer-led consortium already appears close to snaring control of the company.
The so-called Manhattan Software consortium, which includes the New York-based HarbourVest Partners, said it already had support of 48 per cent of MYOB's shareholders.
Guinness Peat Group, Colonial, Octavian and Schroeder have all expressed support. Under the offer, shareholders will get $1.15 a share if it attains 50 per cent ownership, or $1.25 a share if it secures full-ownership. MYOB shares rose 8.5c to $1.13.
One obstacle to the deal yesterday appeared to be MYOB co-founder and former chief executive Craig Winkler, who holds a 27 per cent stake in the company. Mr Gray conceded Mr Winkler, whom he has known for several years, was yet to return his calls.
Archer has offered to keep MYOB's recently appointed chief executive, Tim Reed, and Mr Winkler as the group's head of innovation.
However, Mr Gray hinted the acquisition could be followed with substantial cost cuts and the divestment of MYOB's Chinese operations. "I don't think it's going to be clear sailing ahead," he said.
Guinness Peat Group's executive director, Gary Weiss, urged MYOB to "engage" with Archer.
"To put it simply we are strongly supportive of the Archer [bid] as we were of the substantially higher price earlier this year," Dr Weiss told the Herald.
"The result is that we now have a materially lower proposal for shareholders than would have been the position at the beginning of this year."
GPG got its 13.5 per cent stake when MYOB merged with the software group Solution 6 in 2004.
Archer Capital will partly finance the deal from its largest fund - Fund 4 - which raised $1.36 billion from investors in June last year.
