LA Private

Tyro deal turns from Potentia into zero reality

Nobody wants Tyro Payments (ASX:TYR) – Westpac said pass and walked away last December and now its latest suitor, US private equity group Potentia, has shuffled off back to its homeland.

The news saw Tyro shares lose 19% in the first hour of trading on Monday, before ending the day with a 16% loss at $1.28.

Potentia Capital ditched Tyro after more than eight months of negotiations and non-exclusive due diligence with the payments fintech.

Potentia was granted due diligence in January in the hope it might improve its $1.60 per share bid. The private equity group had originally offered $1.27 per share in its first non-binding approach last September.

Tyro ended talks with Potentia when Westpac appeared briefly as a suitor, then walked in December before Christmas. Potentia reappeared in January.

“The Board has been working with Potentia in good faith in the best interests of all Tyro shareholders over a period of many months to conclude a proposal,” Tyro directors told the ASX first thing Monday.

“However Potentia has now advised Tyro it does not intend to proceed with a proposal to acquire the Company. Accordingly, discussions with Potentia in relation to a possible change of control proposal have now ceased.

“Potentia’s decision to withdraw follows Tyro granting them due diligence, as well as extensive and advanced negotiation of material commercial terms and draft transaction documents.

“Tyro facilitated engagement with regulators to understand the complexity and anticipated timeframes to complete a transaction relating to the proposed private equity ownership of an Authorised Deposit-taking Institution (ADI). Tyro also worked with Potentia to develop processes that could potentially address regulatory requirements to reduce risk to Tyro by providing increased confidence of completion in a reasonable timeframe.

“Tyro’s prospects remain strong, as highlighted in Tyro’s most recent FY23 guidance on 15 May 2023 in which gross profit was upgraded to a range of $192 million to $194 million and EBITDA was upgraded to a range of $41 million to $43 million. In addition, Tyro announced last week it now offers Tap to Pay on iPhone to accept contactless payments.”

Tyro Chair Fiona Pak-Poy said in the statement on Monday, “The Board and management team have worked with commitment and in good faith to facilitate a potential change of control transaction to be put to our shareholders for consideration. We have appreciated Potentia’s engagement and are disappointed that they were ultimately unable to deliver a revised offer.”

“While these have been long and drawn-out discussions, the refreshed leadership team under Jon Davey has continued to deliver substantial operational achievements, including launching Tyro Pro, Tyro Go and Tyro BYO (Tap to Pay on iPhone). These performance outcomes have strengthened the financial and market position of Tyro as we deliver our clear strategic roadmap.”