MYOB Group share price rockets 13% higher after board recommends KKR takeover

The MYOB Group Ltd (ASX:MYO) share price has surged higher after its board recommended the KKR takeover offer…

a woman

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The MYOB Group Ltd (ASX: MYO) share price has bounced back from a heavy decline last week and is notably higher in morning trade.

At the time of writing the accounting software company's shares are up 13.5% to $3.26.

Why is the MYOB share price storming higher?

Last week the MYOB share price was one of the worst performers on the ASX after it advised that private equity firm KKR had revised its takeover offer.

After completing its due diligence and finalising its debt funding commitments, KKR reduced its offer down approximately 10% from $3.77 per share to $3.40 per share.

The market appeared to be concerned that MYOB wouldn't agree to a deal at this level and investors sold its shares down to reflect these doubts.

However, this morning the company announced that it has entered into a Scheme Implementation Agreement under which KKR will acquire all shares in MYOB it does not already own by way of scheme of arrangement.

As part of the agreement, MYOB has agreed 'go shop' provisions that allow it to solicit competing proposals until February 22. This also includes a commitment from KKR to sell its shareholding into, or vote in favour of, any qualifying superior proposal. No break fee will be triggered in relation to the recommendation and acceptance of any superior proposal.

What now?

The directors of MYOB have unanimously recommended that shareholders vote in favour of the transaction in the absence of a superior proposal and subject to an independent expert concluding the transaction is in the best interests of shareholders.

Subject to those qualifications, each MYOB director has advised that they intend to vote all shares held or controlled by them in favour of the scheme.

Should you invest?

With its shares rising strongly today, I think MYOB's shares are fully valued now.

And while there is always a small chance that a superior proposal could be made, I wouldn't invest in its shares in the hope that this is the case.

Instead, I would suggest investors take a look at rival Xero Limited (ASX: XRO) or fintech peer Bravura Solutions Ltd (ASX: BVS).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Bravura Solutions Ltd 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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