Reckon surges 32pc after selling accounting business to MYOB for $180m
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Online accountant Reckon has jumped by a third after selling its accountants practice management division to billion-dollar rival MYOB.
Reckon (ASX:RKN) will pocket $180 million for the sale to MYOB (ASX:MYO) while retaining its business and legal practice management divisions.
MYOB paid almost six times the revenue generated by the accountant division.
Reckon shares jumped 40c to $1.61 on the news, valuing the company at $181 million.
The cash will be used to pay off debt and issue a special dividend to shareholders.
Reckon banked $5.5 million profit for the half-year to June — an 11 per cent fall from the same period last year. Year-on-year revenue was flat at $50.1 million.
MYOB will take over s many as 3000 accounting practices, intellectual property, systems and process as well as more than 120 employees.
“The move marks a significant step forward for Reckon, as we look to narrow our focus on the small business accounting software market, further fuelling momentum in an area that’s rife with untapped opportunities especially as more enterprises look to the cloud,” Reckon chief executive Clive Rabie said.
“We believe that combining two businesses that are strategically and culturally aligned under the MYOB group presents a compelling opportunity for our clients and investors. The combined business provides efficiencies and resources that will enable long-term benefits for our clients and employees.”
MYOB says the acquisition will strengthen their adviser base by deepening their relationships and help to accelerate the development of its practice suite.
Their shares were trading at $3.64 at open on Thursday.
Sale of this division follows the de-merger of Reckon’s document management division and subsequent listing on a sub-market of the London Stock Exchange.