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Is MYOB Group Ltd set to buy Reckon Limited?

Credit: austinwood23

Shares of accounting software providers, Reckon Limited (ASX: RKN) and MYOB Group Limited (ASX: MYO) are in the spotlight today. Reckon, a $260 million small-cap, has seen its share price fall 5.3% today as speculation continues to swirl that it could be the target of a takeover.

Last month and again this week, news outlets revealed speculation was mounting that Reckon could be an appealing target for larger accounting software rivals looking to gain market share locally and abroad. In light of the blistering success of XERO FPO NZ (ASX: XRO), Sage and MYOB were pinned up as the top suitors.

In October, Reckon announced to the market that it, “has engaged Macquarie Capital in a process to assess a range of strategic options for the company”.

Then, this week The Australian reported investment banks UBS and Morgan Stanley may be vying for a role in any potential takeover of Reckon by MYOB. According to the news article, both investment banks recently published research reports on MYOB.

Foolish takeaway

Sources believe Reckon is weighing up the options for its accounting platform in the face of growing competition from the likes of Xero, MYOB, Sage and Intuit.

However, while an offer may indeed materialise, personally, I think investors shouldn’t get hung up on speculation; but instead base their investment decisions on the facts and the health of the business over the long term. Indeed, I think Xero is shaping up to be a clear winner in the accounting software market and its shares are more deserving of your investment dollars than any other provider at this time.

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Motley Fool writer/analyst Owen Raszkiewicz owns shares of Xero.

Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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