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Private equity group Pacific Equity Partners has pulled out of a proposed $514 million takeover of founder-led ReadyTech (ASX: RDY), although the suitor says it is mulling a potential alternative proposal for the software company.
That wasn’t enough to assure shareholders who marked ReadyTech shares more than 8 per cent lower at the open to $3.60, well below Pacific Equity’s original proposal of $4.50 per share.
ReadyTech, which offers a suite of software products to support student management systems, payroll, HR and workplace procurement activities, announced to the market in November that it had received a conditional, non-binding indicative proposal via a scheme of arrangement from Pacific Equity. It warned at the time that a deal was no certainty.
The company today announced that this proposal had been withdrawn, but that Pacific Equity is working on an alternative proposal ‘that could deliver $4.50 per share consideration (even if not all upfront)’.
The statement hints at a potential staged buyout proposal from the Sydney-based private equity group.
“ReadyTech has not yet received details of the alternative proposal,” says the company in its announcement to the ASX.
“The discussions with Pacific Equity Partners are ongoing and no agreement has yet been reached between the parties.”
The biggest hurdle to a successful takeover for Pacific Equity is the 32.01 per cent stake in ReadyTech controlled by long-time shareholder Pemba Capital Partners, which took a holding in the company before its 2019 float on the ASX.
Pacific Equity secured ASIC approval to work with Pemba on the original proposal, but ReadyTech informed the market in November that the two parties didn't have an agreement in place to ‘develop a more certain proposal’.
The ReadyTech board says it intends to finalise discussions on an alternative proposal from Pacific Equity ‘promptly’, but also warns that a formal offer is no certainty.
ReadyTech was co-founded in the late 1990s by Marc Washbourne and Ken Shepherd, who has since left the company. Washbourne is the company’s CEO.
The entrepreneurs initially established the business as a provider of technology services to employment agencies before expanding into student management systems.
ReadyTech this year ramped up its market position in the government tech space through the $23.1 million acquisition of software provider IT Vision which gave it an additional 190 local government customers and built on its existing footprint in Western Australia, South Australia, NSW and Queensland.
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