Payments technology company, Keycorp (ASX:KYC), has begun its campaign to woo over investors and convince them to accept Australian private equity firm Archer Capital's takeover offer.
In a statement to the ASX, the company noted the offer from Archer Capital would see Keycorp shareholders receive $0.58 per share, providing a 42 per cent premium for shareholders on the underlying business value of $0.19 per share, based on the last close price before the offer announcement.
The company also noted a lack of future growth opportunities stating that its prospect for future organic growth was constrained by the limited size of the current EFTPOS services market, which the company already has a healthy share of.
“We believe that future profit growth rests largely with acquisitions in segments that are compatible with our current business or which otherwise enable us to leverage current capabilities,” the statement read.
Despite the board using the company’s money reserves to fund "acquisitions of value", a large amount of additional funding would still be needed to achieve significant inorganic growth.
According to the statement, the company’s small size restricted it from raising equity without attracting significant risk or diluting share prices.
Additionally, the board noted the high ongoing operating costs of running the publicly listed company as prompting factor in its recommendation.
“Over the past 12 months, the board has undertaken a thorough assessment of the various options available to the company with the support of independent corporate and legal advice,” the statement reads.
“Upon completion of this process, the board is firmly of the view that the current Offer by Archer Capital offers a superior outcome relative to other options, and that it clearly represents a fair and reasonable outcome for all shareholders.”
Keycorp supplies a number of technologies associated with payments, including EFTPOS terminals and bank branch technologies.
Keycorp will hold a shareholder meeting to approve the scheme of transaction in November.