November 19, 2008
Guinness Peat Group is supporting a takeover for the business in which it already holds a 13.6% stake. It has joined in with another three investors who jointly hold 34% of the company to form a united takeover body.
Even funnier to read was the suggestion that Sage has approached MYOB looking for an acquisition – if ever someone wanted a case of two old world players (very large and profitable old world players it must be said) looking to dance the Samba before their industry dies, this is it. Sage is apparently impressed with MYOB’s investment in cutting edge technology. They must have upgraded the water coolers and coffee machines recently, because there’s nothing obvious with their software which deserves the term “cutting edge”.
My assessment of MYOB is that it’s a highly lucrative business which has however, significant medium term risks that it’s facing.
Like other traditional desktop software companies it needs to make the change, at least in the medium term, to an on-demand delivery method and with that go through the pain in terms of revenue and profit. The potential investors will know this and will either be looking to make an opportunistic purchase while during a time of economic uncertainty or alternatively will be confident that MYOB can ride out the culture shift that it’s going to have to face over the next few years.
My assessment is that the bid is more of the former than the latter and that much underestimation is happening in terms of the impact that Cloud Computing will have on MYOB’s bottom line.
Watch this space!
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