By Shashwat Awasthi and Byron Kaye
(Reuters) -Three of Australia’s biggest banks are considering a bid for payment terminals firm Tyro, underscoring the importance of new revenue streams as rising interest rates batter the mortgage market.
Australian retail banks are anxious to compete with Block Inc, the payments firm controlled by Twitter founder Jack Dorsey, which has been expanding its point-of-sale offer in the country since buying buy-now-pay-later giant Afterpay this year.
This comes at a time when aggressive rate hikes since May by the country’s central bank to curb inflation have dampened previously runaway property prices, forcing lenders to chase growth from thinner sales volumes.
Tyro, valued at A$807.6 million ($507.9 million) as of Monday’s close, mainly provides business banking products including electronic funds transfer at point of sale (EFTPOS) terminals that accept debit and credit card payments, as well as e-commerce products.
Australia’s no.3 lender Westpac confirmed preliminary talks to buy Tyro on Tuesday, and a bidding war may be in the offing after local media reported Commonwealth Bank of Australia and National Australia Bank were also interested.
NAB Chief Executive Officer Ross McEwan declined to comment when asked by Reuters about Tyro. CBA did not immediately respond to request for comment.
Shares in Tyro, which logged transactions worth more than A$25.5 billion in 2021 according to its website, rose as much as 5.5% in early deals to A$1.645, their highest since April, before trading flat by 0030 GMT.
Tyro last month rejected a A$1.27 per share indicative offer from a private equity consortium led by Potentia Capital Management.
Potentia had also entered a voting deed with Tyro’s largest shareholder, billionaire Mike Cannon-Brookes, preventing him from accepting any competing proposal lower than A$1.52 per share.
“From a Tyro perspective, it’s clear that Westpac would have significantly more synergies than the PE consortium. Accordingly, if Westpac’s due diligence is completed successfully, we think it likely that a firm offer will be made,” Jefferies equity analyst John Campbell said in a note.
($1 = 1.5901 Australian dollars)
(Reporting by Shashwat Awasthi and Upasana Singh in Bengaluru, Byron Kaye in Sydney, and Lucy Craymer in Wellington; Editing by Shounak Dasgupta and Rashmi Aich)