Nikko AM: Pushpay Worth More Than Is Being Offered

The board of Pushpay, the New Zealand founded church payment and management software company dual listed on the NZX and ASX, has recommended that shareholders accept a takeover offer of $1.34 per share. The offer has been presented by a consortium comprising a large shareholder and an Australian private equity firm.

As a large active shareholder (owning approximately 1.4% of the stock), we will be voting against accepting the offer because we do not believe that it reflects good value for this great Kiwi business operating primarily in North America.

Our position is guided by a number of factors. Firstly, we note that this offer is at the very bottom of the independent valuation range of $1.33 to $1.53. But moreover, there are a number of important factors over and above the matters considered in the independent valuation report that we do not believe are adequately reflected in the offer price:

• Pushpay management’s own forecasts for near-term earnings and medium-term growth reflect their own optimism about the future growth prospects for the company.
• There are emerging opportunities for the company to serve new markets, like the North American Catholic market, that are already beginning to show good momentum.
• Currently sitting at around 55% of total church giving, we see digital payment as having room for significant growth, ultimately to closer to a 100% market share.
• Pushpay generates good positive cashflow and has a great balance sheet, so financially the company is extremely sound.

All these factors indicate that Pushpay is worth more than is being offered.

As a large, active shareholder we have expressed these views to the company’s board and management and encourage other shareholders to also vote against the offer as it stands.

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