Pacific Equity Partners (PEP) has withdrawn its non-binding $514 million proposal to acquire software company ReadyTech (ASX: RDY) saying it is working on an alternative proposal.
According to PEP, the alternative proposal could still provide shareholders with the $4.50-a-share return originally proposed, but not necessarily all upfront.
Announcing the bid withdrawal on 22 December, ReadyTech said it had not yet received details of the alternative proposal but discussions with PEP were on-going. No agreement had been reached and the independent board committee (IBC) appointed to consider PEP’s initial proposal intended to finalise discussions promptly.
The IBC comprises non-executive directors Tony Faure (chair), Elizabeth Crouch and Tim Ebbeck plus chief executive Marc Washbourne.
ReadyTech has reaffirmed its guidance for financial year 2023 provided when it released its financial year 2022 results on 17 August. The company expects that, before the contribution of IT Vision, organic revenue growth will be “in the mid-teens”; a $2 million incremental revenue contribution from financial year 2022 acquisitions was expected to generate EBITDA of 35-36%. IT Vision is expected to make an 11-month revenue contribution of $12.6 million on EBITDA of 22-24%.
On 15 November, ReadyTech reported that after further discussions with PEP, the private equity firm had provided written re-confirmation of its conditional offer. The reconfirmation also referred to a scrip alternative for shareholders to receive shares, or shares and cash in a new entity as an alternative to all cash. This was, presumably, structured to enable former private equity majority owner Pemba Capital to retain a stake.
The Sydney growth capital firm took ReadyTech through an IPO and float on the ASX in April 2019. ReadyTech shares were listed at $1.51.
Pemba retains a 32.01% stake in the company.
In its initial announcement, ReadyTech said the proposal anticipated that PEP and Pemba would be allowed by ASIC to work together to develop a proposal but noted that it had been told that no agreement, arrangement or understanding then existed in relation to the proposal.
ReadyTech provides key software, via a SaaS business model, to the education, employment services, workforce management, government, and justice sectors. The software simplifies operations across people management and community engagement.
The company has retained Jeffries (Australia) as financial adviser and Corrs Chambers Westgarth as legal adviser.