The Tyro Payments Ltd (ASX: TYR) share price has sunk 17% as it walked away from takeover discussions.
Tyro is a payments tech business – it provides payment terminals for retailers, cafes and so on. It also offers other services for businesses.
End of potential takeover?
Tyro said that after discussing a possible deal with Potentia Capital Management and Westpac Banking Corp (ASX: WBC), it decided to cease all current discussions.
The board carefully considered the situation, with assistance from external advisers.
Tyro’s board said that the discussions have not resulted in a proposal that the board believes “fairly values” Tyro. Westpac said it didn’t want to submit an offer to Tyro.
However, Tyro said it “remains open to engaging with any credible change of control proposal it receives that represents compelling value”.
The board said Tyro has “attractive growth prospects in the Australian payments and business banking markets”. The company will continue to focus on executing its strategy.
It said that it’s “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.”
Rejected higher bid
Tyro also confirmed that it had received a higher bid of $1.60 per share from Potentia, valuing the business at an enterprise value of approximately $875 million.
The board decided that this offer significantly undervalued Tyro and rejected the offer.
Tyro’s board noted that this offer “comes at a time of significant share market volatility and cyclical weakness in global technology and payment company valuations. It noted that the Tyro share price had been as high as $2.92 within the past 12 months.
Final thoughts on the Tyro share price
We’ll see if Westpac or Potentia come back with an acceptable bid, but I don’t think they will, there seems to be a major gap between the offer and what Tyro seem to want.
After rejecting the offer, the business will now need to go on and prove it’s worth more than what it rejected, considering the Tyro share price is now $1.24 – significantly below the rejected Potentia offer.
