The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is down 1.5% as the ASX 200 (ASX: XJO) bank pursues accounting software business MYOB.
In response to market speculation, ANZ today confirmed that it is in discussions with Kohlberg Kravis Roberts & Co (KKR) about a potential acquisition of MYOB.
What’s going on?
ANZ described MYOB as one of Australia’s leading providers of business management, financial and accounting solutions for small and medium enterprises (SMEs), enterprise (referring to larger clients) and accounting practice customers.
KKR and ANZ are yet to reach an agreement in relation to the acquisition and “there is no certainty it will proceed.”
If the transaction does proceed, ANZ noted that it would be subject to regulatory approvals, including from the Australian Competition and Consumer Commission (ACCC) and the New Zealand Overseas Investments Office.
ANZ said it will make an announcement to the market if the negotiations are successfully completed and an agreement is entered into.
According to reporting by the Australian Financial Review, ANZ is understood to be drawn to MYOB’s foothold in small business banking and the opportunity to offer a full suite of integrated banking and accounting products to that group of potential clients.
The AFR said that MYOB has more than a million small business customers. It reportedly made $502 million of revenue and saw a $104 million after-tax loss for the 12 months to 31 December 2021. It was noted that MYOB was generating $445 million of annual revenue when KKR bought it in 2019.
What to make of this for the ANZ share price
I can see the appeal for ANZ of being able to offer clients the full package. It would also give the bank much more detail about what the transactions were, and could also help give quicker information about cashflow and profitability.
However, in terms of the profitability, MYOB would only be a small portion of ANZ’s revenue and profit, so it won’t make much impact in the scheme of things.
I think that the ANZ share price could be an interesting idea after its 20% fall this year, but margins could rise as central bank interest rates rise.