Tyro rejected the bid from a group of investors led by Potentia.
👉 Background: Tyro is an ASX-listed payments company that was founded back in 2003. It is pretty chunky - it has more than 61,000 Australian merchants, processed more than $25 billion in the 2021 financial year and is the 5th largest provider of eftpos services in Australia.
👉 What happened: In September this year, a group of investors, led by a private equity firm called Potentia, lobbed a bid for Tyro. In October, Westpac looked to be joining the bidding party.
👉 What else: But as of yesterday, it was all over red rover. Tyro rejected the bid from Potentia which was a 62% premium to its undisturbed share price. And after the rejected bids, Tyro’s share price dropped nearly 18%.
💡Company value is in the eye of the beholder. When a company becomes a target for acquisition, the share price of that company generally ‘runs up’ or spikes on the news.
💡Investors become more optimistic about the company's future prospects. And investors start to price the company at the value that the bidder has placed on the company.
💡But then, if the acquisition doesn’t take place, the share price will often go the other way. So it’s no surprise that Tyro’s investors were pretty disappointed when neither bid was accepted. But according to its chairman, the offers so far don’t reflect the true value of the company.
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