18th December 2008. A revised bid from Manhattan Software Bidco, the takeover vehicle of Archer Capital & Harbourvest, has allowed Manhattan to gain control of more than 50.1% of the shares in ASX-listed MYOB, and it has now declared its takeover unconditional.
The revised bid increased Manhattan’s previous offer of $1.1215 per share for full company control , and rejected by the MYOB board as “opportunistic”. This bid valued MYOB at about $437 million. Under the new two-tier offer, Manhattan is offering MYOB shareholders $1.0564 per share, increasing to $1.1564 per share if Manhattan receives acceptances totalling 90 per cent of MYOBS’ shares. This bid values MYOB at about A$451 million.
Now the new bid has secured Manhattan 50.1% of MYOB, the new bid has, in the absence of a higher bid, finally got the approval of MYOB’s board, reversing its long held view that Manhattan’s previous bids were inadequate. The board now plans to lodge acceptances with Manhattan for the approx 30% shareholding it controls, including the 28.2% held by founder and Chief Innovation Executive, Craig Winkler. In recent times the MYOB board has drawn on the conclusions of a report commissioned from independent valuer Lonergan Edwards that the Manhattan offer was neither fair nor reasonable. In a letter to shareholders dated 18th December the board stated:
(subject to no higher bid emerging) “The MYOB Board unanimously recommends that shareholders lodge acceptance instructions into the Acceptance Facility with respect to their shareholdings as soon as the new BLUE acceptance form is available. Acceptance will maximise the prospects of all shareholders receiving the $1.15643 (and at the same time protect shareholders, who have not already accepted the Manhattan offer, from the risk of receiving $1.05642 for their shares).
– MYOB’s directors will lodge acceptance instructions into the Acceptance Facility in respect of their own MYOB shares
– The MYOB Board believes that the prospect of a competing higher offer is now remote, given Manhattan is now unconditionally entitled to greater than 50.2% of MYOB. The MYOB Board notes the risks of remaining as part of a minority shareholder group in MYOB, in the event that Manhattan does not receive 90% of acceptances. These risks include that MYOB shares may trade less frequently on the ASX and that Manhattan has indicated it will increase the level of debt in
MYOB has also agreed to pay a special fully franked dividend of 8.15 cents per share, subject to Manhattan declaring its offer unconditional.
Simon McKeon, Chairman of the MYOB Board, stated, “MYOB is a special company and the Board continues to maintain its belief in the quality of the MYOB business and its future prospects. However, now that Manhattan has received acceptances of more than 50% of MYOB ordinary shares, the Board recommends that shareholders accept into the Acceptance Facility. This will maximise shareholders’ prospects of receiving the higher Manhattan offer valued at $1.15646.”
Andrew Gray, Director of Manhattan and Partner with Archer Capital, said, “We are extremely pleased to be through 50% and remain hopeful that with a Board recommendation we will now reach 90% before Christmas. While encouraged by the Board’s support we believe shareholders should consider seriously the benefits of accepting directly into our offer, with the prospect of receiving cash sooner, and also avoiding the possible risks of being left a minority shareholder.”
Manhattan’s offer has been extended by 14 days. The Manhattan offer is now scheduled to close at 7:00pm, Wednesday 31 December 2008 (unless further extended). Shareholders will shortly receive a Supplementary Bidder’s Statement from Manhattan, which will include forms for those wishing to lodge acceptance instructions into the Acceptance Facility and those wishing to accept Manhattan’s offer.