Sage fails to land deal for Australia's MYOB: sources

HONG KONG/LONDON Fri Aug 19, 2011 10:26am EDT

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HONG KONG/LONDON (Reuters) - Market turmoil has derailed software group Sage's (SGE.L) bid to buy Australian peer MYOB, handing rival bidder Bain Capital the chance to secure a deal in its place, people familiar with the matter said.

Sage entered exclusive discussions to buy the Australian software group earlier this week having outbid its rivals. But falls in its share price and a weak pound mean its offer would now require shareholder approval.

That uncertainty has handed the advantage to Bain Capital, one of the private equity firms that was a rival bidder for the business, the people said.

Bain is now in talks and working to secure a deal for MYOB, owned by Australian buyouts group Archer Capital and HarbourVest Partners, the people added.

Sage had bid up to A$1.4 billion ($1.5 billion), about 13 times MYOB's core earnings, and at least 10 percent above offers from competitors Bain and KKR (KKR.N).

Sage's share price is down about 10 percent since the start of the week and some 16 percent since the start of August, giving the group a market capitalization of around 3.2 billion pounds ($5.2 billion).

At that level, the company needs to get shareholder backing for a deal, something it didn't need at the start of the process.

Archer and HarbourVest bought MYOB, an abbreviation of the phrase 'Mind Your Own Business', for about A$450 million in 2008. The firms had hired UBS AG (UBSN.VX) to advise on the sale, sources have said previously.

Sage and Archer were not immediately available for comment. Bain and HarbourVest declined to comment.

(Additional reporting by Paul Sandle; Editing by Hans-Juergen Peters)

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