Westpac has announced it will not proceed with its proposed takeover of payments technology firm Tyro, declaring in a statement to the Australian Securities Exchange (ASX) that the deal “is not in the best interests of Westpac shareholders”.
The big four bank confirmed in October that it was in preliminary talks to acquire 100 per cent of Tyro, noting the deal would boost Westpac’s merchant acquiring proposition.
“An acquisition would strengthen Westpac’s small business proposition, enabling it to better support customers and grow merchant acquiring, particularly in the hospitality and healthcare sectors,” it said at the time.
Westpac, however, hastened to add that “there [was] no certainty that any transaction [would] result” from these negotiations.
Tyro’s share price tumbled to a three-month low of $1.18 (down 20.1 per cent on Friday’s closing day price) following news of Westpac’s withdrawal from the proposed deal.
The payments fintech, which was founded in 2003, confirmed it had received approaches from several potential buyers, including Westpac, though it added that these offers were “non-binding and highly conditional in nature”.
A $658 million takeover offer was earlier proposed by a Potentia Capital-led consortium (consisting of Harbour Vest, MLC Investments and The Construction and Building Unions Superannuation Fund) in September, which Tyro rejected.
“Tyro is engaging in preliminary discussions with selected parties in the context of maximising value for all shareholders,” the company said.
After the big four banks, Tyro ranks as Australia’s fifth largest merchant-acquiring bank by number of terminals in the market. As at June 2022, Tyro has more than 63,700 Australian merchant partners, and operates 109,000 terminals.
Tyro listed on the ASX in December 2019, growing its annual transaction value from $17.5 billion in FY19 to $34.2 billion for FY22, the company stated in its 2022 annual report.
However, the fintech has a faced difficult trot since the Covid-19 pandemic first emerged, experiencing a 60 per cent drop in its share price (prior to the Westpac takeover withdrawal) over the last three years.
As well, Tyro has so far paid out more than $5 million in remediation to affected merchants following a more than two-week outage in its EFTPOS network in early 2021 – reportedly the result of a coding glitch affecting its devices.