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MYOB CEO Tim Reed.Credit:Josh Robenstone

However,after completing its due diligence and finalising debt-funding commitments,KKR on Thursday dropped the offer price to $3.40 a share,valuing MYOB at $2 billion.

MYOB's board has informed KKR that it is not recommending the revised offer,but the companies remain in discussions.

Once the dominant provider of accounting software to small and medium-sized businesses in Australia,MYOB has been outpaced in recent years by cloud-based accounting software provider Xero.

Since KKR's initial bid in October,shares of global technology players like Facebook and Google owner Alphabet have fallen sharply amid concerns about incursions on privacy,sparking a sell-down across the broader sector.

Xero's share price has dropped from $48.84 to $38.53 amid a 10 per cent decline on the Australian sharemarket. And credit markets have raised the price of corporate debt amid expectations of a rate hike,making it more expensive for firms like KKR to carry out leveraged buyouts.

KKR declined to comment on the revised bid.

A well-placed source said KKR was a long-term investor and so it wasn't necessarily a straightforward conclusion that its decision to cut the offer was just due to market moves.

"KKR understands it is a highly competitive market and MYOB is part way through a significant transformation,which will require heavy investment,"the source said.

The source also noted that"sophisticated investor"Bain Capital,which had two directors on MYOB's board,sold its 17.6 per cent stake to KKR for $3.15 a share in October.

"It might be opportunism based on that move down in tech shares,"CMC Markets chief strategist Michael McCarthy said."The reality is,when you make a takeover bid you see a lot of value above and beyond the price you bid at."

Before KKR entered the fray,MYOB was trading at $2.98 a share and the accounting software platform had not traded above $3.40 a share since January 2018. Its shares closed 13.95 per cent weaker at $2.90 on Thursday.

The revised offer is open until 5pm on Friday.

with Reuters

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