Pushpay chairman Graham Shaw told shareholders that directors and executives were committed to executing on its growth strategy, despite being 'distracted' by a takeover offer.
Pushpay chairman Graham Shaw told shareholders that directors and executives were committed to executing on its growth strategy, despite being 'distracted' by a takeover offer.
Pushpay management are committed to continuing the company’s growth strategy despite a deal to take the company private for $1.54 billion most likely failing.
Speaking to shareholders at a meeting in Auckland on Friday morning, chairman of the church donations software company, Graham Shaw, said directors and management did not plan to resign as they did not lack the motivation to continue.
“I don’t detect our management team has given up and wanted to go home. We believe in Pushpay’s future.
“While the takeover activity has been distracting, I don’t think it has driven a mindset which is one of not focusing on the business.”
Ahead of the official shareholder voting meeting, 56 per cent of investors not associated with the buyers voted in favour of the deal - shy of the 75 per cent threshold needed for it to go ahead.
Global investment firm Sixth Street and Australian private equity firm BGH Capital - who collectively owned 20.34 per cent of Pushpay through various interests - launched a joint bid to buy out all other Pushpay shareholders for $1.34 a share in October.
Significant shareholders including the Accident Compensation Corporation, Nikko Asset Management and ANZ Investments, publicly decried the deal because it was at the bottom end of an independent assessor’s valuation range of $1.33 to $1.53 per share.
Shaw said he was pleased it recommended the deal to investors, despite it not meeting one of two criteria required to pass.
“I don’t accept that that’s a failure on the part of the board.”
Pushpay’s share price was valued at $1.28 on Wednesday when it entered a trading halt.
Pushpay is a church donations software business. Photo / NZ Herald
If the deal was passed, Shaw said he did not expect any shareholder to lose money on their investment.
“Well, they won’t if it goes against,” he quipped.
However, he warned its share price could fall regardless of the takeover outcome, because a number of hedge funds bought equity after the deal was launched, in anticipation of an arbitrage opportunity.
“If the scheme is terminated, we would expect those hedge funds will sell down which will affect the company’s share price.”
Pushpay had 2000 fewer shareholders on its registry today, compared with before the offer was launched, Shaw said.
At the meeting, Pushpay chief executive Molly Matthews exclaimed her own commitment to the company if it remained dual-listed on the New Zealand and Australian stock exchanges.
“Wholeheartedly, our team is ready to execute our strategy in either scenario. We remain quite committed to the company.”
Shaw added: “The board is supportive of management, there is certainly no lack of faith.”
Shareholder Nikko Asset Management’s head of New Zealand equities, Stuart Williams, said at the meeting it was pleased the offer was brought to the table, despite the firm voting against it.
“It’s not in our mind that we’d desire or expect resignations from the board,” Williams said.
“We’re having a bit of disagreement about valuation and time frames, we’re not having a disagreement about strategy or about you as individuals.”
Shaw was questioned by shareholders about the risks associated with its growth strategy, which were stressed in supporting documents for the deal.
“It’s not a case of suddenly that it’s risky, just that we’re experiencing the time taken to expand and execute on the strategies.
Pushpay chief executive Molly Matthews says she is committed to the company. Photo / Stuart Isett
Shaw had previously said the board explored options for more than six months, including staying listed, and the takeover presented was the best offer.
The acquisition price was 16.7 times underlying earnings, based on the midpoint of Pushpay’s guidance of US$56 million (NZ$86m) in the 2023 financial year.
In December, the bidders Sixth Street and BGH, raised issues with the Takeovers Panel about the independent adviser’s report by Grant Samuel & Associates, commissioned by Pushpay, specifically stating that the financial forecasts Pushpay provided were unrealistic and overly optimistic.
If the scheme of arrangement was not approved, as expected by Pushpay’s board, they had until 5pm on Tuesday March 7 to hold another shareholder meeting or could terminate the deal.
The bidders could also choose to terminate their offer.
If the deal did not proceed, Pushpay would remain listed on the New Zealand stock exchange and Australian stock exchange.
