Forum Archive Index - July 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

 

BCH holders,

 

At this stage one could say that we are talking about a merger where both companies have been accorded the weighting DAD thinks, they deserve.

 

( My figures on the back of an envelope show that there in no special treatment for BCH ). 

 

However, BCH shareholders will be losing their imputation credits. ( Fortunately, most will go for growth rather than dividends ).

 

Some may say that for that reason, BCH Directors in public may not necessarily support that formula of 1.5 DAD shares for each BCH share.

 

There will be synergies and that would be beneficial. Total shares will be about 219.2, say 220 mill. after a merger has been approved.

 

This is arrived at by excluding the number of executive - and employees' options on issue ( they tend to be converted into new options in such a transaction ).

 

It also accepts that the 9.8 mill. shares which BCH holds in DAD, will be cancelled.

 

BCH shareholders will wonder if DAD may come later with a new offer of say >1.6 , instead of 1.5 shares for each BCH share:

 

Comment has been made that if a merger would not take place, the value of DAD shares would be materially reduced. ( The price of DAD shares rose steeply on takeover talk).

 

On the other hand, I believe that the price of the BCH share could rise and that it would gravitate back towards the $ 13- $ 13.50 mark.( I think that the shareprice had moved down from $ 13.25 to the current level of $ 11.90 because of this takeover talk ). 

 

One could therefore say that DAD will lose and BCH will gain if a merger would not take place. To balance this equation, a higher offer is needed!

 

One can safely say that up to 90% of DAD shareholdings will vote for a merger using the present proposal!

 

Australian Institutions hold 37% of BCH at present, I believe. It will be interesting to know what the total Australian voting power would be at a BCH special meeting.  

 

Waiting for a reply from BCH.

 

A merger is needed to secure a solid medium and long term future for both companies.

 

Gerry