Today, MYOB Group Ltd (ASX: MYO) released the Scheme Booklet for the proposed acquisition by Kohlberg Kravis Roberts & Co. L.P (KKR) after gaining approval from the Federal Court of Australia for convening a meeting of MYOB shareholders to vote on 17 April 2019.
The offer from KKR to buy MYOB is an all-cash offer of $3.40 to acquire the remaining shares in MYOB it does not currently own. KKR currently own around ~19.9% and are seeking to acquire the remaining ~80%.
Independent Expert Report
MYOB engaged Grant Samuel as its independent expert, and they have concluded the scheme is fair and reasonable in the absence of a superior proposal. Grant Samuel assessed the value of MYOB shares as being between $3.19 to $3.69 a share, indicating that value within this range is reasonable.
The independent expert report said, “Grant Samuel has concluded that the KKR proposal is fair and reasonable and in the best interests of MYOB shareholders”.
Will There Be a Superior Proposal?
Given MYOB’s ‘go shop’ period concluded on 22 February, MYOB had 60 days to solicit a superior proposal and none were received. It seems unlikely that a superior proposal would emerge now.
How Likely Is The Takeover?
Given the directors of MYOB have recommended it and there is a break fee of $20 million to be paid to KKR if the deal doesn’t go ahead, to me it seems the directors are confident it will go ahead and the deal will receive the required votes and court approval. Let’s not forget Xero Ltd (ASX: XRO) and Intuit Inc (NASDAQ: INTU) are breathing down MYOB’s neck.
Is It Time To Sell?
Excluding a superior offer, it seems unlikely for the MYOB share price to trade any higher than the offer price of $3.40. The offer of $3.40 per share assumes that no full year 2018 dividend will be paid as it needs the written consent of KKR to do, which is unlikely to be granted.
If shares can be sold for around the offer price on-market, it could be a good time to sell and deploy funds into better opportunities with more potential upside.
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