Tyro Payments chairman David Thodey has rejected a $658 million acquisition bid from a Potentia Capital-led consortium after Mike Cannon Brookes decided to sell his holding in the lack of a better offer of $25 per share.
The private equity consortium’s offer, according to Mr Thodey, is highly conditional and devalues the payments company. Tyro shares rose 25.5% to $1.24 in response to the bid, with market sources speculating that a strategic investor could emerge.
The share price of Tyro Payments Ltd (ASX: TYR) rose in late morning trade on Monday, following the release of the company’s FY22 earnings reports.
Potentia, and its investment partners HarbourVest Partners, MLC, and industry super fund Cbus have made an initial bid of $1.27 per share, valuing Tyro’s listed equity at $658 million, a 30% premium to its previous close.
Tyro shares have been hammering in recent months, falling 66% in the previous year to the last close at 98, and are down from a 52-week high of $4.39.
The Tyro board rejected the bid because it was considerably below Tyro’s intrinsic value, very opportunistic considering the shares have traded much higher over the previous year, excessively conditional, and did not recognise Tyro’s prospects and strong funding position to help it grow.
Chris Pruny, portfolio manager of QVG Capital and a Tyro stakeholder, likewise rejected the bid as opportunistic.“At that price, it’s an opportunistic proposal that the board will easily reject,” he said.
“Tyro has never had and never will have a funding problem.” However, it has an excessive cost basis, which presents a chance for the bidder.”
While Mr Cannon Brookes agreed to sell his 12.5% holding in Potentia through his investment vehicle Grok Ventures, Tyro stated that Grok “cannot take any action under a competing bid unless that proposal has a value of $25 per share greater than the most recent Potentia offering.”
According to sources, the Grok acceptance agreement could be crafted to put the company in play for a strategic purchaser.
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