Tyro's share price swings in wake of takeover collapses

The share price for ASX-listed payments company Tyro has seen heavy volatility following the collapse of takeover discussions with both Potentia and Westpac Banking Group. Key figures close to the company, however, including tech entrepreneur Mike Cannon-Brookes, appear to still be in favour of a sale.

Potentia takeover talks scrapped

Tyro recently announced that it had rejected an improved takeover bid from Potentia Capital Management, as the revised offer still fails to provide a fair valuation for the payments company. 

According to the announcement made by Tyro on 12 December, its Board had ceased all current discussions with Potentia because they had 'not resulted in a proposal that the Board believes fairly values Tyro.'

The revised offer from Potentia came after Tyro announced on 8 September that it had rejected a prior unsolicited bid from Potentia for the full acquisition of the payments company. 

The original offer from Potentia valued Tyro at $1.27 per share, for a total consideration of around $693.9 million.

Potentia was undeterred by the rejection, however, offering a revised indicative proposal of $1.60 per share, which gave Tyro an enterprise valuation of approximately $875 million. 

Westpac withdraws takeover offer

On the same date that Tyro announced the suspension of takeover talks with Potentia, the payments company also announced that Westpac had withdrawn its acquisition bid for the company. 

Westpac, one of Australia's big four banks, announced in late October that it had entered preliminary discussions with Tyro for the acquisition of 100% of the company's issued share capital. 

According to an announcement from Tyro, following due diligence Westpac has decided that 'submitting an offer is not in the best interests of Westpac shareholders at this time.'

Tyro's share price swings

The news of the scuppered acquisition bids has led to strong volatility in Tyro's share price. 

The company's share price posted a drop of 19.5% on 12 December, the day it announced the collapse of both the Potentia and Westpac bids. On 13 December, however, Tyro's share price posted intraday gains as high as 15%. 

Tyro's share price currently stands at $1.33, as compared to a month-long low of $1.20 on 12 December. Its current share price remains above the initial, unsolicited offer from Potentia, which valued Tyro shares at $1.27. 

Hope for a successful takeover bid persists, particularly given the influence of Mike Cannon-Brookes - a key shareholder in Tyro. Cannon-Brookes' investment vehicle Grok holds a 12.5% equity stake in Tyro. 

Cannon-Brookes has signalled his backing for a Tyro acquisition, with Grok entering a Voting and Acceptance Deed with Potentia as of September to accept any takeover bid at a price not less than $1.27 per share. 

Potentia has since informed Tyro that Grok cannot take any action under a competing proposal unless it provides a value of at least $1.85 per share. 

The Voting and Acceptance Deed will remain in force until at least March 2023, with the potential for an extension until June. 

Despite the failure of the latest round of acquisition talks, Tyro has indicated that it is still amenable to an acquisition bid for a sufficient consideration. 

The payment platform said it 'remains open to engaging with any credible change of control proposal it receives that represents compelling value for Tyro shareholders.'

Tyro also touted the successful execution of its current strategy, stating that it is 'tracking towards the top end of guidance for all operating metrics and is making good progress on its three strategic priorities for FY23, namely Tyro Go, Tyro Pro and automated customer onboarding.'

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