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Australian private equity firm Pacific Equity Partners is set to collaborate with the largest shareholder of founder-led ReadyTech (ASX: RDY) to pursue a $514 million takeover of the Sydney-based human resources software provider.
ReadyTech today confirmed market rumours that Pacific Equity was pursuing a buyout of the company, which offers offers a suite of software products to support student management systems, payroll, HR and workplace procurement activities.
The company says it has received a non-binding indicative proposal pitched at $4.50 per share.
The news sent ReadyTech shares soaring in early trade, jumping as much as 32 per cent to a high of $4.28 before easing back to $4.10 at 12.01pm AEDT.
The biggest stumbling block to a successful takeover for Pacific Equity is the 32.01 per cent stake in ReadyTech controlled by long-time shareholder Pemba Capital Partners, which took a stake in the company before its 2019 float on the ASX.
However, Pemba earlier this year was rumoured to be looking for an exit from ReadyTech. The investor has already shaved its holding from the 41.6 per cent it held going into the 2019 IPO.
Pacific Equity is securing permission from the Australian Securities and Investments Commission (ASIC) to allow it to jointly work with Pemba on the takeover proposal which is still subject to due diligence and approvals from the company’s debt financiers.
“For the avoidance of doubt, ReadyTech is informed that Pacific Equity Partners and Pemba have no agreement, arrangement or understanding in relation to the proposal,” says ReadyTech in its announcement to the ASX.
Independent non-executive directors Tony Faure, the ReadyTech chairman, Elizabeth Crouch and Tim Ebbeck, and CEO Marc Washbourne, will sit on an independent board committee to consider the proposal. The committee has granted Pacific Equity non-exclusive access to due diligence information to further the process.
“Discussions in relation to the proposal are ongoing and no agreement has been reached between the parties in relation to the value, structure or terms of any transaction,” says the company. “There is no certainty that these discussions will result in any transaction.”
ReadyTech was co-founded in the late 1990s by Washbourne and Ken Shepherd, who has since left the company. Shepherd’s departure in 2015 led to Pemba taking a significant stake in ReadyTech which established its business initially by providing technology to employment agencies before expanding into student management systems.
The company this year ramped up its market position in the government tech space through the $23.1 million acquisition of software provider IT Vision which gave it an additional 190 local government customers and built on its existing footprint in Western Australia, South Australia, NSW and Queensland.
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