Morningstar sees opportunity for Tyro in buying out SmartPay to expand SME footprint

Morningstar says acquisition offer by Tyro Payments TYR.AX of its smaller rival Smartpay SPY.NZ could provide an opportunity for the Australian payment solutions company to grow its scale and offering

Australian and New Zealand's payment services providers Tyro and SmartPay, on Monday, said the former had offered to buyout SPY, valuing it at NZ$241.1 mln ($140.37 mln)

Brokerage says SmartPay offers similar products and services as Tyro for small and medium-sized enterprises (SMEs)

The integration of both companies' technologies and customer bases could lead to improved efficiencies, expanded market reach, and enhanced value propositions for SMEs - Morningstar

Brokerage finds it too early to incorporate a potential deal into their estimates and flags TYR shares are about 25% undervalued

Says TYR is undervalued likely due to Reserve Bank of Australia's proposal to ban debit card payment surcharges

TYR ended Monday at A$0.745

($1 = 1.7176 New Zealand dollars)