Why ANZ’s $4.5b MYOB acquisition plan always looked a non-starter

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OPINION: ANZ’s pursuit of Suncorp gave it a nice reason to pull the pin on a planned $4.5 billion deal for MYOB that had already caused a fair share of raised eyebrows.

The leaking of the deal before it was done either meant ANZ was trying to prepare its shareholders, or MYOB’s bankers were looking to flush out a competitive bid.

MYOB was publicly listed on the ASX before being acquired by private equity firm KKR for $2.4 billion in 2019. KKR appointed Greg Ellis as its new CEO, a highly respected and seasoned leader who was formerly CEO of Realestate.com.au .The speed of MYOB’s revenue growth didn’t attract any demerit points, rising from $445 million in 2019 to just over $500 million last year.

In the face of these metrics, it is a testament to the chutzpah of private equiteers that KKR was demanding ANZ stump up almost twice what it paid, for a very quick and efficient $2 billion profit. Although it’s hard to imagine margins rising significantly from that jump on point, one might optimistically suppose that MYOB’s free cash margin rose to 25 per cent and generated $125 million.

But it still leaves unanswered the question of which metric ANZ was using to justify this “strategic” acquisition. Investment bank Barrenjoey had already released a somewhat negative report questioning the strategic rational.

 

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