ANZ in talks to buy MYOB - how the deal could impact Xero

MYOB chief executive Greg Ellis. Photo / File

ANZ says it's in talks to buy MYOB - the accounting software company that operates in the Australian and New Zealand markets, competing with Xero.

The previously ASX-listed MYOB was acquired by KKR for A$2.4 billion ($2.6b) in 2019 after the US private equity giant bought the shares it did not already own.

It then delisted the firm.

KKR wants more than A$4b from an MYOB sale, according to a Bloomberg report.

KKR has also been reported as a possible buyer for Vodafone NZ's celltower network, which is to sell for around $1b. Bids close on Friday. Yesterday, Spark announced the 70 per cent of its cell tower network for $900m.

ANZ says there is no certainty talks will lead to a deal - and that if it does it will require approvals from the Australian Competition and Consumer Commission and the New Zealand Overseas Investments Office.

Analysts say the deal could allow ANZ to position itself as a one-stop shop for small business financial management.

"I wouldn't be surprised to see others bidding now the 'for sale' sign is up," Lark Group founder Andy Lark told the Herald.

Lark - who has formerly held top marketing jobs for Dell and ASB parent CommBank, saw the deal benefitting Xero.

"MYOB being owned by a bank would give Xero a clear, non-conflicted standing in the market," Lark said.

"Open Banking mandates and data flows mean there is little advantage in a bank owning accounting software. The other banks would likely drive more customers to Xero."

The Auckland-based investor and entrepreneur is a natural backer of Xero, where he was a member of the executive team from 2014 to 2017.

But investors seem to agree with Lark's take. Xero shares were up 1.60 per cent to A$85.63 (for a market cap of A$12.81b) in ASX trading after the news broke. The broader ASX was down 0.91 per cent.

Kiwi acquisitions play key role

Melbourne-based MYOB, which today claims around 1.2 million customers (to Xero's 3.3 million), was formed in the 1980s and has grown through acquisition - including two key deals involving New Zealand companies.

One was Auckland-based Banklink, which it bought in June 2013 for $136m from founders Derek Jones, Malcolm MacDonald and Stephen Agnew.

The other was a A$224m deal in 2004 to acquire Solution 6 - which had recently merged with Auckland online accounting pioneer Exonet, co-founded by Maurice Bryham and Satellite Spies frontman Mark Loveys.

Banklink provided crucial automated bank feed capability, while Exonet brought cloud smarts.

MYOB had A$502m in revenue in the year to December 31, according to a regulatory filing, and made a A$104m net loss after, pinned on a capital restructure.

The company had annual revenue of A$445m and A$190m in underlying ebitda before KKR took it private in May 2019.