Will Westpac’s takeover bid boost Tyro shares?

The share price of ASX-listed fintech Tyro Payments could receive a boost from a takeover bid made by big four bank Westpac, following the company’s previous rejection of an offer from a consortium led by Potentia Capital. Tyro’s appointment of a new CEO could also shake up the company and help to boost its share price.

Westpac makes bid for Tyro

Australian banking giant Westpac has confirmed reports that it has entered preliminary discussions with Tyro for a full acquisition of the payments company.

According to Westpac, the acquisition would strengthen its small business offerings by enabling it to ‘better support customers and grow merchant acquiring’.

Tyro also confirmed the reports, stating that in addition to Westpac, it had ‘received approaches from several parties expressing interest in a potential change of control transaction.’

The company said it had entered preliminary discussions with selected parties but did not disclose further details.

The offer from Westpac is not without peril, as it could adversely affect a lucrative deal struck by Tyro with Bendigo and Adelaide Bank.

The partnership with Bendigo and Adelaide Bank brought Tyro transactions worth $2.5 billion in the last financial year, accounting for around 16% of its total transaction value.

Tyro a popular takeover target

Westpac’s takeover bid arrives shortly after Tyro refused an unsolicited bid from a consortium led by Sydney-headquartered private equity investor Potentia Capital.

The offer entailed the full acquisition of Tyro for a price of $1.27 per share, for a total consideration of approximately $693.9 million.

In a statement released on 8 September, Tyro said it had rejected the bid because it ‘significantly undervalues Tyro and, as such, is not in the best interest of shareholders as a whole.’4

Morgan Stanley subsequently said that the failed bid from Potentia would serve as a ‘catalyst for other strategic bidders to consider.'

According to Morgan Stanley, Tyro is likely to prove a popular takeover target in future for several reasons, chief amongst them a trend of global consolidation in the sector.

As central banks raise interest rates and funds become more costly, financial institutions will need to expand in scale to boost profitability.

The global decline in risk assets since the start of 2022 also makes it an opportune time for big financial institutions to acquire small, rapidly growing companies like Tyro.

Tyro appoints new CEO

Tyro recently announced the appointment of Jonathan Davey as its new CEO, following what it described as an extensive executive search process.

Davey is an inside hire, having previously served as the CEO of Tyro’s health business segment since May 2021. He was previously the head of health fintech Medipass, which Tyro acquired in the first half of 2021.

Davey officially assumed the role of Tyro CEO on 3 October, with outgoing CEO Robbie Cooke continuing to play a role with the company until the end of the year to facilitate the transition process.

According to Tyro, Davey is a veteran technology executive with 30 years of experience in the financial services sector, in both corporate and start-up environments.

In making the appointment, Tyro highlighted Davey’s nearly 18 months of experience with the company as head of its health business segment, which it said would help him to ‘hit the ground running.’

Tyro claims to be one of Australia’s first fintech companies and Australia’s largest EFTPOS provider amongst authorised deposit-taking institutions (ADIs) outside of the big four banks.

According to Tyro, more than 67,000 Australian businesses have made use of its tailored EFTPOS solutions and business loan and banking services.

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