Tyro share price rebounds 14% as rumours swirl over next moves

Takeover talks with Potentia and Westpac collapsed yesterday. Today, investors are wondering what comes next.

| More on:
A man with long hair and tattoos holds out an EFTPOS payment machine from behind a shop counter.

Image source: Getty Images

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

Key points

  • The Tyro share price is leaping higher following yesterday’s rout
  • The Tyro board rejected the improved takeover offer from Potentia and Westpac opted to back out
  • Rumours are making the rounds that Potentia could approach investors directly, perhaps with a sweetened offer

The Tyro Payments Ltd (ASX: TYR) share price is up 13.8% at the time of writing, having earlier posted gains of more than 15%.

Tyro shares are currently trading for $1.37 apiece.

This comes following yesterday's 19.5% loss in the payments company's shares in the wake of apparently collapsed takeover talks with both Potentia and Westpac Banking Corp (ASX: WBC).

What happened with the takeover talks?

In a nutshell, the company's board rejected an improved offer from Potentia, saying its discussions had not resulted in a proposal that fairly values the Tyro share price.

Potentia had upped its initial offer to $1.60 per share. That's some 17% above the current share price and more than 33% above yesterday's closing price.

In rejecting the offer, the board noted that Tyro shares had traded at highs of $2.93 over the past 12 months.

Separately, Westpac reported it won't be submitting an offer as the bank does not believe that would be in the best interest of its own shareholders at this time.

What rumours could be sending the Tyro share price higher today?

Atop some likely bargain hunting after yesterday's sharp selldown, the Tyro share price could be getting a boost from several rumours making their rounds amongst the financial news outlets.

Chief amongst those unconfirmed rumours is that Potentia could bypass Tyro's board and go directly to the shareholders.

Those shareholders include Mike Cannon-Brookes, who owns 12.5% of Tyro shares via Grok Ventures. Cannon-Brookes is reportedly in favour of selling.

QVG Capital portfolio manager Chris Prunty said the board needed to do more to convince shareholders it had made the right call.

According to Prunty (courtesy of The Australian Financial Review):

If a board rejects a bid on valuation grounds then the onus is on the board to put a compelling case to shareholders as to the value they see. The Tyro board has not done this.

$1.60 is not a knock-out price so rejecting it isn't a sin, but with Westpac out of the race Potentia is perhaps not as far away as they were. We'll be encouraging the board to engage with any future bid. Why not let shareholders decide?

Harvest Lane's chief investment officer, Luke Cummings, believes Potentia will come back with an improved offer on the Tyro share price. He also indicated Potentia could put the offer directly to shareholders:

Hats off to them for rejecting the initial approach because they have forced Potentia to come back with a higher offer. But if I'm them [Potentia], I'm going straight to shareholders with $1.60 in the next few days to try and get 50.1 per cent and saying to the board this is our best and final offer unless we get access to due diligence.

Another unconfirmed rumour that could be impacting the Tyro share price is the potential for the payments company to launch a capital raising.

The Australian speculated on this in an article published after market close yesterday.

The paper cited Tyro's big expenses and sizeable losses over the past two financial years, along with the deep pockets of its competition, as a reason that "some believe an equity raising would be needed".

Tyro share price snapshot

Despite today's big rebound, the Tyro share price remains down 53% in 2022.

Tyro shares kicked off the year trading for $2.92 apiece.

Motley Fool contributor Bernd Struben 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.

More on Financial Shares

A green-caped superhero reveals their identity with a big dollar sign on their chest.
Financial Shares

Own Soul Patts shares? Here's its latest investment for diversification

The company has added further energy exposure to its portfolio.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Financial Shares

2 rising ASX financial shares with 'meaningful upside' still left: fundie

Financials outperformed every other sector in FY25, but there are still buying opportunities left, say these experts.

Read more »

Frustrated and shocked business woman reading bad news online from phone.
Financial Shares

Macquarie shares sink 5% on Q1 update

The investment bank is having a tough start to the year.

Read more »

A man holds his baby on his lap at the dining room table while he looks at his laptop screen earnestly.
Financial Shares

After its result, does Macquarie rate AMP shares a buy, hold or sell?

The financial services company released a strong second-quarter update on Monday.

Read more »

A blockchain investor sits at his desk with a laptop computer open and a phone checking information from a booklet in a home office setting.
Broker Notes

Are non-bank lenders a lucrative alternative to the big 4 banks?

The big 4 banks are widely perceived as being fully valued or overvalued.

Read more »

Red sell button on an Apple keyboard.
Financial Shares

ASX 200 financials was the best sector of FY25. But it's time to sell these 2 stocks, say experts

The ASX 200 financials sector gave investors a near-30% total return in the 2025 financial year.

Read more »

Happy woman working on a laptop.
Financial Shares

AMP share price jumps on strong Q2 update

Let's see what the financial services company reported for the quarter.

Read more »

A woman holds up hands to compare two things with question marks above her hands.
Financial Shares

The pros and cons of buying IAG shares this month

Is this the right time to invest in the insurance giant?

Read more »