A company that started in Lower Hutt and grew into a sharemarket darling may have now outgrown New Zealand.
Baycorp Holdings is on the verge of moving its primary listing to Australia as it finalises merger talks with Sydney-based Data Advantage. A media report today suggests talks between the have progressed quickly since they confirmed last month they were merger talks.
Baycorp managing director Keith McLaughlin declined to give details today, but indicated an announcement regarding the outcome of talks was pending.
“It’s an ongoing process. I don’t believe that it’s in Baycorp’s or its staff’s interests that it would drag on for too long,” Mr McLaughlin said.
He said whatever the outcome, shareholders would not be disadvantaged.
It’s expected the shareholding in the enlarged company would be split 50:50 between present shareholders of the two entities, almost half of whom have shares in both companies.
Baycorp, which started as a small Lower Hutt debt collection agency, has expanded into a transnational company with a market capitalisation of $1 billion.
It took a 9.9 percent stake in Data Advantage last September (since diluted to 9.3 percent) as the two formed a joint venture. Baycorp paid an average of $A4.64 ($NZ5.75) for those shares. Data Advantage’s share price has since risen as high as $A7.10.
Sources close to the deal say it’s now more likely that Data Advantage will take over Baycorp, and the new dual-listed entity will have its primary listing on the Australian Stock Exchange.
The two roughly equally-sized companies are looking to expand out of Australasia and into Asia. Being Sydney-based better serves that thrust.
JB Were estimates the merged entity would have a market capitalisation of $A1.5 billion, and rank about 70th on the ASX-200 and ninth on the NZSE-40.
Baycorp management is expected to have the bigger hand in running the new company, and Mr McLaughlin is tipped to move to Sydney.
Baycorp is understood to be concerned at Data Advantage’s galloping share price, which is pushing up the potential price of the transaction. Its shares closed yesterday at $A6.34.
Although Baycorp shares have slipped from $NZ13 since last September, it has been a star performer on the local sharemarket for several years. Its shares were down 1c at $12.19 today. The company ranks consistently near the top in surveys of economic value added. It dual-listed in Australia in 1999 to improve access for international investors.
Although it made a 2-for-1 share split at the same time to boost its liquidity, its share price has surged on from $10.25 at the time the split was announced.
Forsyth Barr Frater Williams executive director Don Turkington said today he was surprised Baycorp was considering a move to Australia.
“About the only consolation is that probably the really high- growth phase of Baycorp shares has already occurred. It’s not quite the driver it once was.
“But psychologically, losing good companies on the New Zealand board is not good. It can ill afford to lose them, because we don’t have the companies to replace them,” he said.
New Zealand companies traditionally struggled initially when moving across the Tasman, but Baycorp’s high institutional shareholding in Australia would make the transition easier, Dr Turkington said.
About 45 percent of Baycorp is owned by Australian institutions.
