Baycorp merger gets green light

By Phil Boeyen, ShareChat Business News Editor

Tuesday 7th August 2001

Baycorp (NZSE: BCH) has confirmed its $1.9 billion merger with Australian company Data Advantage and says the new company will be headquartered in Sydney and called Baycorp Advantage.

The Auckland-based credit and financial services company says after extensive negotiations the two parties have settled on merger terms that will see Data Advantage offer 1.56 shares for every one Baycorp share.

In addition Baycorp shareholders will receive a final dividend 13.5 cents per share and a special dividend of 20 cents per share. Data Advantage shareholders will get a final dividend of A6 cents and a special payment of A8 cents per share.

Under the agreement Baycorp shareholders will have a 58% interest in the merged group following the cancellation of Baycorp's 9.3 per cent interest in Data Advantage, which is currently intended to be part of the merger process.

Baycorp staffers will retain the top jobs. BCH chairman Rosanne Meo will be chairman of the newly merged company and Baycorp boss Keith McLaughlin will be managing director.

In a joint statement, Mrs Meo and Data Advantage chairman Brian Gatfield say they are delighted they have reached agreement.

"From the outset, it was clear to us that merging our two companies made compelling sense. This merger is unanimously recommended by the boards of Baycorp and Data Advantage.

""While these discussions may have been somewhat protracted, we have always remained 100 per cent committed to completing this union. Essentially, we are bringing together two companies which are highly successful in their respective markets and creating a single, focused and powerful regional player."

The two companies says the merger will help them to develop a substantial presence in the Asia Pacific region and beyond, and is expected to be cash earnings per share positive, pre goodwill.

Mrs. Meo says a key element of the merger was the significant synergy benefits that would be generated.

"These are certainly very persuasive. We estimate synergy benefits to be in excess of 19 million per annum within three years. To put that into context, it is equivalent to around 30% of the current combined Ebit of both companies."

"The synergies will come from our ability to cross sell products into each other's markets, economies of scale and scope, and from both companies having a concerted approach to growing our operations in Asia and further afield."

The merger is expected to be in place by the end of this year.

Although it will be based in Sydney, Keith McLaughlin says New Zealand remains a key market for the company and it will retain a substantial operational office here.

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