MYOB to merge with Solution 6 in $233m deal

Business software maker MYOB has agreed to merge with Solution 6 in a deal worth around $233 million.

MYOB and Solution 6 directors have unanimously endorsed the merger proposal.

In the deal, MYOB would offer 0.55 a share for each Solution 6 share it does not already own, after Solution 6 distributes up to 20.7 cents per share ($52.7 million) in surplus cash to its shareholders via a capital return.

MYOB would participate in Solution 6's capital return as a holder of 12.6 percent of the issued shares in Solution 6. This return would be subject to Solution 6 shareholders' approval, the companies said.

The exact amount of capital return would be determined after the completion of a separate sale of Solution 6's Professional and Enterprise businesses to Francisco Partners for $34 million.

Guiness Peat Group Plc -- which holds a 7.3 percent share in Solution 6 -- would support the deal, taking MYOB's share in Solution 6 to 19.9 percent.

Craig Winkler, CEO at MYOB, said the merger would take well-known and respected brands more strongly into global markets.

'We will combine the complementary ranges of software products and services for accounting firms currently provided by MYOB and Solution 6,' Winkler said in a statement.

'Accounting practices across Australia, New Zealand, Asia and Europe will benefit from an improved product and services mix and more powerful support and product development functions,' he said.

Winkler added that the merger would not dilute the focus of MYOB on reducing the administrative burden on small business owners.

'Our existing business of providing business management software and services for small-medium enterprises around the world will benefit from the merger through expanded accountant-client relationships and the integration of practice management products and SME software,' he said.

Pre-tax cost savings of $10 to $12 million a year are expected within three years as a result of the merger, primarily from the rationalisation of Solution 6's head office and global overhead expenses, other office consolidation and rationalisation of system and back office functions, the companies said.

MYOB shares were closed at $1.16 per share on Friday, while Solution 6 shares closed at 70 cents per share.