The Tyro Payments Ltd (ASX: TYR) share price dropped by more than 5% today. It was reported that the potential suitor of the payments business, Potentia Capital Management, has been trying to get shareholders to accept its offer.
For readers who didn't see it last week, Tyro received an "unsolicited, non-binding and indicative proposal". The offer was from a consortium of private investors, led by Potential Capital Management. The offer was $1.27 per share, with the option for shareholders to receive shares in a private Tyro business.
Potentia advised that it has entered into a voting and acceptance deed with Mike Cannon-Brookes' Grok in relation to its 12.5% shareholding in Tyro.
The Tyro board rejected the offer, indicating that it significantly undervalued Tyro and that it's highly opportunistic given the offer price is "substantially below" where the Tyro share price has traded in the last year. It pointed out that the company has attractive growth prospects as it increases its market share. The company said it's expecting to achieve strong and improving operating leverage in the medium-term.
What happened today?
The Australian reports that Potentia has been trying to convince shareholders to accept the takeover bid. It reported that Cannon-Brookes wants to be a co-owner of Tyro if a sufficiently better bid doesn't come in.
The newspaper reported that other shareholders are unlikely to accept the deal because of how quickly the offer was rejected.
Morgan Stanley analysts think that an offer of between $2 to $2.50 would be the "going rate" for similar companies. Don't forget, the company's initial public offer (IPO) price was $2.75 per share. So the offer price represented an offer of less than half.
Tyro Payments share price snapshot
Over the last month, Tyro shares have risen by around 30%. This rise came after the Potentia bid.
The broker UBS has a buy rating and a price target of $1.80 on the business after the initial takeover bid came in. That represents a rise of more than 30%, if the broker ends up being right.
