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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

More on Mergers & Acquisitions

Group of people in a gym high five each other surrounded by gym equipment.
Mergers & Acquisitions

This ASX tech stock is hitting a record high on acquisition news

The market is responding positively to this news. Let's dig deeper into it.

Read more »

Two people shaking hands in the boardroom on a merger.
Mergers & Acquisitions

What did Macquarie make of the Brickworks and Soul Patts merger?

Macquarie sees simplification, scale, and upside… but it also has a warning..

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
Mergers & Acquisitions

PointsBet share price surges 11% on improved takeover offer

The bidding war for PointsBet shares continues apace today.

Read more »

A couple sit in front of a laptop reading ASX shares news articles and learning about ASX 200 bargain buys
Share Gainers

Why are Soul Patts shares up 9% today?

A marriage proposal has seen investors flock to this company.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Mergers & Acquisitions

Why are Brickworks shares up 18% today?

Let's find out what is getting investors excited this morning.

Read more »

Two hands being shaken symbolising a deal.
Mergers & Acquisitions

Soul Patts to merge with Brickworks shares: What does this mean for investors?

These two blue chips are merging as part of a $14 billion deal.

Read more »

The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition
Mergers & Acquisitions

WiseTech share price storms higher on $3.25b blockbuster acquisition

What is the company spending billions on? Let's find out.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Mergers & Acquisitions

IAG share price lifts off on strategic alliance approval

IAG shares are racing higher in Thursday’s sinking market.

Read more »