Shares in Tyro Payments fell more than 20% at one stage yesterday after Westpac ended takeover talks and a second, higher offer from a private equity group failed to win approval.
The shares plunged to a low of $1.155 before ending at $1.20, down 19.4% in a brutal day’s trading as shareholders criticised the company for failing to do a deal and consult them.
Westpac ended its takeover talks with, saying it would not be in the interests of the bank’s shareholders to table an offer for the fintech. There was little further elaboration from the bank except that the decision was after doing due diligence.
In other words, Westpac found enough negatives in the close look at the company’s books to dissuade it from making a deal.
Tyro also announced that it had also rejected a sweetened offer for the company from a consortium of bidders led by Potentia Capital, which raised their bid to $1.60 a share.
Tyro, a rival to the big four banks in financial payments has been in play during recent months after Potentia tabled a bid for the company in September, an attempt that was rebuffed as opportunistic.
Biggest shareholder, Michael Cannon-Brookes has signalled he is open to selling his stake in Tyro, which is led by chief executive Jon Davey.
In October Westpac appeared to be joining the contest, when it said it was in talks about a potential buyout, but on Monday morning Westpac said it had decided not to proceed with a deal.
“Westpac has now undertaken due diligence on Tyro and has decided that submitting an offer is not in the best interests of Westpac shareholders at this time,” Westpac told the ASX.
Tyro also said its board had decided to cease all discussions with potential buyers of the company, as these talks had failed to result in an acceptable offer for the business. It also said Potentia had raised its bid for the company too $1.60, valuing the business at about $875 million.
Tyro directors said the latest proposal still “significantly” undervalued the company.
Tyro said it “remains open to engaging with any credible change of control proposal it receives that represents compelling value for Tyro shareholders.”
“Based on the Board’s assessment of the Company’s attractive growth prospects in the Australian payments and business banking markets, no such proposal has been received, and accordingly the Board and management will continue to focus on executing on Tyro’s current strategy.
“In this regard, Tyro confirms that it is tracking towards the top end of guidance for all operating metrics and is making good progress executing on its three strategic priorities for FY23, namely Tyro Go, Tyro Pro and automated customer onboarding.
