Takeover talks reignited between Tyro and Potentia Capital

Takeover talks reignited between Tyro and Potentia Capital

Talks of a potential takeover are back on between Sydney-based Tyro Payments (ASX: TYR) and private equity firm Potentia Capital despite two of the latter’s offers being rejected by the fintech over the last five months.

In an ASX trading update today, Tyro announced it is offering Potentia a four-week period of due diligence so that the firm can put forward a deal that satisfies the board, which previously knocked back offers valuing the company at $875 million and $660 million.

The offers were put forward by a consortium led by Potentia, which comprises HarbourVest Partners, MLC Investment and The Construction and Building Unions Superannuation Fund.

Tyro said both deals had been carefully considered, but were unanimously rejected on the grounds that the indicative offers significantly undervalued the company.

“Following discussions between Tyro’s advisors and Potentia’s advisors and following further consideration and consultation with its external advisors, the Tyro board yesterday offered to provide Potentia with a four-week period of due diligence to enable Potentia to develop a significantly improved proposal and confirm the necessary funding commitments attached to any possible future offer,” Tyro said in today’s update.

Major shareholder Grok Ventures, the private investment vehicle of Australian billionaire Mike Cannon-Brookes and his wife Annie which owns 12.5 per cent of Tyro, previously backed both Potentia deals.

Upon receiving Potentia’s revised bid last month, Grok agreed it “cannot take any action under a competing proposal, unless that competing proposal has a value of $1.85 per share or greater”. The agreement will continue to be in force until 7 March 2023 and may extend up to 7 June 2023.

The potential of a third offer from Potentia comes as Tyro is continuing to navigate a legal debacle with Bannister Law – a Sydney-based law firm that is acting on behalf of Tyro customers who were affected by a terminal outage in January 2021.

The claim alleges that from 5 January 2021, a substantial number of Tyro’s customers experienced an outage, causing their Tyro EFTPOS payment terminals to be inoperable and incapable of repair by remote software updates.

For up to a month, Tyro’s customers were unable to process non-cash payments while they awaited rectification of the connectivity issue and experienced a substantial loss of business as a result.

At the time of the outage, Tyro said it was due to an issue in specific versions of the terminal platform software supplied by France-based payments business Worldline, the manufacturer of the machines.

Shares in TYR are up 5 per cent to $1.57 each at 11:22am.

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