MYOB has dumped it plan to acquire Reckon’s Accountant Group Assets, the ASX-listed software company announced this morning.
MYOB said that the $180 million deal was called off due the length of time it had taken to receive regulatory approval.
The two companies announced in November that they had reached an agreement for Reckon to sell its Accountants Practice Management business in an all-cash transaction.
Reckon’s Accounts Practice Management Group produces software targeting accounting firms. The deal would have covered Reckon’s APS Practice Management business, Elite Practice Management business, and Docs Corporate Services business, and was subject to approval from the Australian Competition and Consumer Commission and New Zealand’s Commerce Commission.
The parties had originally anticipated that the acquisition would be completed by the second quarter of 2018.
Reckon planned to use the proceeds of the sale to pay off the majority of its debt and for a special dividend. The company would have been left with Business and Legal Practice Management divisions, which have previously delivered about half of Reckon’s revenue.
“With accountants responding positively to the online practice tools MYOB has already brought to market, and competitors clarifying through the ACCC process that they are not currently able to provide a full suite of online practice tools to their clients, the company feels well placed to accelerate investment to further strengthen its market position,” MYOB said in a statement.
“Whilst the acquisition will not complete as planned, we are excited about the opportunity to accelerate the organic growth in our business,” MYOB CEO Tim Reed said.
“With a proven track record of investing for growth, and a market ripe for expansion, we are confident that this is the right time to invest and set our business up for future success, whilst continuing to deliver value to our shareholders and our customers.”
“It is regrettable that the conditions precedent could not be achieved in the time. But we must now focus on business as usual,” Reckon Group CEO Clive Rabie said. “We remain committed to maintaining and supporting our existing APS clients and our strategy to move to the cloud.”
MYOB today detailed an $80 million investment plan, including $50 million over two years on R&D to “bring forward the delivery of MYOB’s online platform”, and $30 million over two years on sales and marketing.
By 2020 the company is aiming to have 1 million online customers.