MYOB to acquire Solution 6
MYOB to acquire Solution 6
Business software maker MYOB is to buy rival accounting software company Solution 6 in a deal worth around $233 million.
Once the proposed merger is sealed, Solution 6's accounting and compliance business and training operations will be combined with MYOB.
MYOB is to offer 0.55 of its shares for every Solution 6 share it does not already own, after Solution 6 distributed up to 20.7 cents per share ($52.7 million) in surplus cash to its shareholders by way of capital return. The exact amount of the capital return will be determined following the completion of the separate sale of Solution 6's professional and enterprise divisions to technology-focused equity fund Francisco partners for around $34 million.
"The merger will take our well known and respected brands more strongly into global markets for the benefit of the expanded company's customers, employees and investors," said MYOB CEO Craig Winkler.
Guinness Peat group Plc, which holds a 7.3 percent stake in Solution 6, has indicated that it will back the deal, taking MYOB's interest in Solution 6 up form 12.6 percent to 19.9 percent. Current MYOB shareholders will own approximately 67 percent of the merged company.
Two of Solution 6's non-executive directors are to be extended invitations to join the MYOB board following completion of the merger.
Both companies said the merger would create both cost savings and revenue growth opportunities. Annualised cost savings in the order of $10-$12 million (before tax) were expected to be realised within three years, primarily from the rationalisation of Solution 6's head office and global overhead expenses, and rationalisation of back-office functions.
Winkler added that the merged entity would enjoy a strong financial position, with net cash surplus to working capital requirements and no debt.
"That financial strength will enable the company to take advantage of international growth opportunities as they arise, with a particular focus on the fragmented Asian market," he said.
Neil Gamble, CEO of Solution 6, will remain with the merged entity for the next three months to oversee the transition arrangements associated with both the merger with MYOB and the sale of the enterprise and professional divisions to Francisco Partners.
Gamble said of the developments: "We are proud of the turnaround we have achieved at Solution 6 over the last three years and anticipate substantial value can be created for our shareholders through this merger."
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