MYOB activist investor Manikay Partners backtracks, approves takeover bid

MYOB investor Manikay Partners has changed tack on a proposed takeover of the software company, agreeing to approve the proposal.

The hedge fund this week notified MYOB chairman Justin Milne that it will vote for the proposed $2 billion acquisition by investment firm Kohlberg Kravis Roberts & Co (KKR), unless a superior offer comes along.

Manikay said it was “disappointed” that Milne and the MYOB board repeatedly recommended the acquisition bid despite its attempts to convince them otherwise.

“We remain very disappointed that, despite our repeated efforts to convince you otherwise, you failed to change your recommendation in light of the material improvement in market conditions since announcement of the [proposed acquisition], among other factors,” Manikay said.

“We are also disappointed that the disclosures to MYOB shareholders did not fully explain the impact of such improved market conditions on the value of MYOB.”

Manikay last month said MYOB is worth more than the agreed $2 billion or $3.40 per share price tag, claiming KKR took advantage of a lull in equities markets to swoop on MYOB when its share price was low. It said an offer of $4.00 a share is a better reflection of the company’s true value.

The hedge fund started buying up MYOB shares in early March 2019, gradually increasing its stake from 7.46 percent to 16.16 percent.

Manikay said it continues to believe that MYOB “has a bright future” and is excited about its current prospects compared to fifteen months ago, when it first purchased MYOB shares.

“Regrettably, it has become evident that the MYOB chairman and other directors do not share our view of MYOB's prospects and value,” the firm said.

“Given the continued support of the MYOB board for the [proposed acquisition], we have determined that should the [acquisition] be completed, we are better served allocating our capital elsewhere.”

MYOB shareholders will meet on 17 April to vote on the proposal.