Ann: SMP: Directors' Statement re Takeover, page-80

Here is the article for those without AFR

Silicon Valley’s Stripe eyeballs Tyro’s languishing share price

Stripe, one of the world’s most valuable fintechs, is taking a close look at Tyro Payments and has had early discussions with the ASX-listed eftpos terminal operator, people with detailed knowledge of those talks say. It has been a difficult few years for Tyro, which has seen its share price battered as investors become sceptical it can compete against massive international rivals and the country’s major banks. Stripe would be a dream suitor for Tyro, which was once a market darling with shares above $4.

The people briefed on the matter, who requested anonymity to speak freely, said there was no offer, indicative or otherwise, or even formal due diligence. Still, Stripe was taking a serious look at Tyro, which now has a market capitalisation of just $370 million and 73,500 merchants on its books. A Tyro spokesman said that there were “no offers that are currently being considered by Tyro management or the board”. The benefit for Stripe is unclear, given its focus is on payments for e-commerce, but Tyro has traded down 23 per cent over the past year. San Francisco-headquartered Stripe, whose backers include Goldman Sachs, Temasek and Baillie Gifford, was last valued at $US91.5 billion ($141 billion).

The US giant has just closed a $US1.1 billion deal to acquire Bridge Network, a stablecoin platform. It reported $US1.4 trillion in payments were processed on its platform in 2024, a 38 per cent jump on the previous year. Meanwhile, Tyro is grinding away on a bid to acquire Smartpay Holdings, as first reported by Street Talk in March. Smartpay is capitalised at $181 million, and Tyro confirmed the offer to acquire 100 per cent of Smartpay at 90¢ per share in cash and shares deal. Tyro is conducting due diligence on a non-executive basis given it was one of two parties to bid for Smartpay.Smartpay is working with Morgan Stanley and Bell Gully. Tyro has Barrenjoey in its corner, which would be in line to advise on a potential Stripe deal.

Naturally, Stripe would allow Saturday’s federal election to come and go before it makes a move, given Labor’s pledge to outlaw debit card surcharges in its next term of government. It’s also difficult for the Tyro board to oversee two transactions at once. Stripe is far from Tyro’s only suitor since shares took a tumble. Potential Capital tried to pull off a takeover in 2023 at $1.75 per share, but surprised the market when it walked away from the deal after months of due diligence. This was also despite major shareholder Grok Ventures’ backing. Macquarie is often touted as a potential interested party; Westpac, once a suitor, has moved on.

Tyro was founded in 2003 and landed on the ASX boards in 2019, after raising funding from Atlassian billionaire Mike Cannon-Brookes’ Grok Ventures, Double Bay’s TDM Growth Ventures, Tiger Global and a handful of other investors. The company obtained a banking licence in 2015 to offer loans, banking accounts and term deposits to its merchant clients.Tyro reported $33 million earnings in the first half of financial year 2025 and 29.5 per cent EBITDA margins. The company generated $21.97 billion in transaction value during the half from 73,559 merchants.