Sage out in front in race for peer

Business software company Sage has been picked as preferred bidder in the race to buy Australian peer MYOB, sources said yesterday.

Sage outbid private equity firms Kohlberg Kravis Roberts and Bain Capital to enter exclusive talks to buy the provider of accountancy software, with one source saying the British company had bid up to A$1.4bn (£905.5m).

Its A$1.3-1.4bn bid gives a valuation of about 13 times MYOB’s core earnings, and was at least 10 per cent above bids from competing private equity firms.

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The deal would be Sage’s biggest to date and would mark a resumption of the acquisition strategy that has driven the group’s international growth during the last decade.

It also demonstrates large corporate buyers’ ability to outbid private equity firms for strategic assets, a reversal from last year when HG Capital snapped up Italian software firm TeamSystem and KKR bought a majority stake in Norway’s Visma.

MYOB, an abbreviation of the phrase ‘Mind Your Own Business’, is being sold by private equity firms Archer Capital and HarbourVest Partners, which bought it for about A$450m in 2008. The firms had hired UBS AG to advise on the sale, sources have said previously.

Sage, which has a market value of $5.5bn, supplies business management software to small and medium-sized enterprises. Its sales are split about one-third software to two-third support contracts.

Sage, based in Newcastle, has grown through acquisitions, typically moving into new markets.

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