The board of digital payments company Tyro Payments (ASX: TYR) has politely rejected a $658 million takeover bid from Potentia Capital Management and its consortium, where the unsolicited offer values the Group at $1.27 per share, a 30% premium above yesterday’s close price of $0.985.
The tech-focussed consortium comprises HarbourVest Partners, MLC Investments and the Cbus Fund, where they plan to add Tyro under its private ownership. With a strong track record of buying out tech companies and a proven experience in transforming software businesses for growth, today’s bid comes as no surprise.
Included in the announcement, Potentia disclosed to Tyro that it has been in discussions and entered into a Voting and Acceptance Deed with Cannon-Brookes Head Trust (Grok), where they are targeting the Trust’s 64.7 million shares (12.5%) shareholding in Tyro.
Grok has taken a strategic stance where it has negotiated its own pre-bid agreement with Potentia in the case of a takeover being completed, where Grok agrees it will accept any takeover offer made and will vote in favour of any scheme arrangements proposed by Potentia. It was noted in the indicative proposal that Grok “cannot take any action under a competing proposal, unless that proposal has a value of $0.25 per share greater than the value of the most recent Potentia proposal.”
Although Tyro rejected the offer, the board has made it very clear that they’re still open to negotiations at the right price.
Today’s bid follows a rough two years for Tyro, who has been inundated with a barrage of ill fortune that has seen shares decline by 66%.
The can of worms began to spill open in January 2021, when the Company put in jeopardy over 10,000 small businesses across Australia when an outage occurred across 30% of their EFTPOS terminals, leaving them ‘bricked’ for nothing short of six days – as if the impacts of COVID weren’t enough for our small business during one of the busiest times of the year?
The total damage of the outage and the loss in sales revenue were hard to gauge; however, the distrust in the Company became very clear where Tyro shares experienced a short-selling attack as class action lawsuits began to surface, which were first brought on by Barrister Law acting on behalf of the affected small-businesses.
Being liable for businesses to be able to trade and receive payments, the Company predicted the remediation costs to balloon to around $15 million where they have even considered its own insurance coverage to meet the shortfall.
Describing the outage as a ‘black swan event’, the Company has reaffirmed that guards and protections have been put in place to avoid any similar disruptions in the future. We have yet to hear the result of the ongoing class-action lawsuit.
Trading Desk Assistant at Emerald Financial
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