Australian banking group Westpac has abandoned plans to buy Tyro Payments, which is engaged in providing EFTPOS services.

In a stock exchange filing, Westpac said: “On 18 October 2022 Westpac announced it was in preliminary discussions with Tyro Payments to acquire 100% of the company’s issued share capital.

“Westpac has now undertaken due diligence on Tyro and has decided that submitting an offer is not in the best interests of Westpac shareholders at this time.”

The deal, first announced in October this year , would have strengthened Westpac’s small business proposition and enabled it to better support clients and grow merchant acquiring, with a focus on the hospitality and healthcare industries.

Local private equity investor Potentia Capital Management was also in the race to buy the payments firm, but Tryo has ceased all talks for the sale of the business.

Earlier, in September this year, Potentia made a A$1.27 ($0.86) a-share non-binding offer to buy the payment firm.

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In a separate statement, Tyro announced that it has received a new, non-binding and indicative proposal from Potentia and a consortium of co-investors of A$1.6 ($1.09) per share, which values the firm at around A$875m ($594.26m). 

“The board has carefully considered the Revised Indicative Proposal, including with the assistance of its financial and legal advisers, and unanimously determined that the Revised Indicative Proposal continues to significantly undervalue Tyro and, as such, is not in the best interests of shareholders as a whole. The board has therefore determined to reject the Revised Indicative Proposal in its current form,” Tyro’s statement read.

In April this year, Westpac was fined A$113m ($76.74m) for compliance failures in its banking, superannuation, and wealth management businesses as well as its former non-life insurance business.