Westpac share price slumps as Tyro takeover scrapped

The major bank won't be forking out for fintech Tyro Payments at this point in time.

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Key points

  • The Westpac share price is down this morning, slipping 0.3% to trade at $23.37 right now
  • Its drop comes amid news the bank won't be progressing with takeover talks for ASX fintech Tyro Payments
  • Westpac believes a bid wouldn't be in shareholders' best interests while Tyro said it's yet to receive an offer representing fair value

The Westpac Banking Corp (ASX: WBC) share price is in the red this morning amid news the bank is no longer pursuing Tyro Payments Ltd (ASX: TYR).

The bank said submitting an acquisition offer for the ASX fintech isn't in its shareholders' best interests for the time being.

Right now, the Westpac share price is 0.3% lower at $23.37.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.7% at the time of writing while the bank's home sector, the S&P/ASX 200 Financials Index (ASX: XFJ), has slipped 0.34%.

Let's take a closer look at today's news from the ASX 200 bank share.

Westpac's Tyro takeover talks binned

The Westpac share price is slipping alongside the broader market on Monday amid news the bank won't be submitting a bid for ASX payments provider Tyro Payments.

Indeed, both parties previously on the hunt for the fintech have been cut from the race today.

Tyro confirmed neither Westpac nor competing suitor Potentia Capital Management was willing to post a bid its board considered fair value. Thus, the fintech has ceased discussions with both parties.

In October, the big four bank confirmed it was in takeover talks with the smaller financial stock. In a release to the ASX today, Westpac said:

Westpac has now undertaken due diligence on Tyro and has decided that submitting an offer is not in the best interests of Westpac shareholders at this time.

The bank initially said acquiring the fintech would strengthen its small business proposition, allowing it to better support customers and grow merchant acquisition. That would particularly be the case in the hospitality and healthcare sectors.

Tyro rejected a $1.27 per share bid put forward by a Potentia-led consortium in September. Today, it revealed the consortium put forward another rejected bid, this time for $1.60 per share – representing an enterprise value of around $875 million.

On both occasions, the company said the offer was materially below the company's fundamental value and highly conditional.

Tyro today said it's still open to takeover talks as long as any offer "represents compelling value".

Westpac share price snapshot

The Westpac share price has outperformed in 2022. The stock is currently 8% higher than it was at the start of the year. It has also lifted 13% since this time last year.

Comparatively, the ASX 200 has slumped 5% year to date and 2% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tyro Payments. The Motley Fool Australia has recommended Tyro Payments and Westpac Banking. 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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