MYOB Group share price sinks lower on KKR takeover update

The MYOB Group Ltd (ASX:MYO) share price has sunk lower on Thursday after private equity firm KKR lowered its takeover offer…

a woman

The MYOB Group Ltd (ASX: MYO) share price has been amongst the worst performers on the Australian share market on Thursday.

In late morning trade the accounting software company's shares have sunk over 11% lower to $2.99.

Why has the MYOB share price sunk lower?

This morning MYOB provided an update on its discussions with private equity firm KKR.

For those that are unaware, in October KKR made an unsolicited, indicative and non-binding proposal to acquire all the shares it does not already own in MYOB at an offer price of $3.70 per share by way of a scheme of arrangement.

Last month MYOB advised that it had granted KKR with information access so that it could complete its due diligence after the private equity firm increased its offer price to $3.77 per share.

Unfortunately, following the completion of due diligence and the finalisation of debt funding commitments, KKR has revised the offer price once again.

And as you might have guessed from the share price reaction, this time the private equity firm has revised its offer downwards.

According to the release, KKR has revised its offer to $3.40 per share, subject to the finalisation of a scheme implementation agreement. It also advised that the offer will expire at 5pm on Friday December 21 2018.

The MYOB board has informed KKR that it is not in a position to recommend the revised proposal but remains in discussions with the firm regarding its proposal.

MYOB will keep the market informed of any developments and advised shareholders not to take any action in relation to the revised proposal at this stage.

What now?

This is certainly a blow for shareholders that held onto its shares following the initial offer and has created a lot of uncertainty.

While it may be tempting to buy the dip in the hope that the $3.40 offer is accepted and completes successfully, I would suggest investors hold off making an investment.

Instead, fellow accounting software company Xero Limited (ASX: XRO) could be a better option, as could fast-growing PCB design software company Altium Limited (ASX: ALU).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium and 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 Scott Phillips.

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