Westpac launches takeover bid for Tyro Payments
Tyro Payments confirmed it has received several takeover approaches from numerous parties including Westpac.
Westpac Bank (ASX: WBC) has confirmed it is in preliminary talks to acquire 100% of Australian fintech Tyro Payments (ASX: TYR).
The bank has said the acquisition would strengthen its small business proposition, enabling it to “better support customers and grow merchant acquiring”.
It referenced a push into the competitive hospitality and healthcare spaces, where the Commonwealth Bank (ASX: CBA) and National Australia Bank (ASX: NAB) currently dominate.
Industry insiders say that Westpac has hired JP Morgan to help run numbers for the proposed acquisition.
Potential takeover offer
Westpac’s bid for Tyro follows a $658 million takeover offer in September by a Potentia Capital-led consortium (including Harbour Vest, MLC Investments and The Construction and Building Unions Superannuation Fund) which Tyro rejected.
Tyro majority shareholder and technology billionaire Mike Cannon-Brookes indicated he was open to selling his 12.5% stake and the company is believed to have remained in talks with the consortium.
Since then, Tyro confirmed it had received interest from several potential buyers, including Westpac, but none of these approaches were advanced or certain enough to warrant further disclosure.
“Tyro is engaging in preliminary discussions with selected parties in the context of maximising value for all shareholders,” it said in a statement.
“The company notes that these approaches are non-binding and highly conditional in nature, and there is no certainty that a binding offer, or a transaction of any kind will eventuate.”
Taking on the big four
Tyro was founded in 2003 as a specialist provider of electronic payment services to merchants.
In 2016, it embarked on a mission to take on the big four banks when it gained a licence to take deposits.
Tyro made its Australian Stock Exchange debut in 2019 with a market capitalisation of around $1.36 billion following an oversubscribed initial public offering.
The Sydney-based company is now the nation’s fifth-largest provider of payment services, and has more than 63,000 merchant customers using its eftpos terminals to accept payments on debit and credit cards, or for Medicare or private health fund claims.
It has also carved out a market share in sectors including hospitality, retail and healthcare.
Tough times
Tyro has experienced tough times since the onset of the COVID-19 pandemic including a three-week nationwide eftpos outage in 2021 amid a wider slump in technology stocks.
A sharp fall in earnings earlier this year led to a sell-off in February, which saw the company shed around $292 million in one day, cutting its value by more than a quarter.