By Chris Hutching
Friday 7th April 2000 |
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A similar rise in the share price occurred a couple of months ago before an announcement that Eforce, formerly Paynter Timber, was transforming into an internet trading company. The latest announcement revealed the identity of two new companies being "acquired" in a similar way - through an issue of shares to the vendors at 40c a share, above the trading price of recent weeks which has been in the mid-35c range.
Stock Exchange chief executive Bill Foster said the chairman of the market surveillance panel was away but he expected the share-price rise would be treated as market volatility, perhaps as a result of speculators.
But some brokers thought the jump showed there had been insider trading.
"People definitely knew something was happening. It started on March 17 when the price was 31c but the big jump was on April 3 when it went from 34c to 42c on volume of about a million shares, which is four or five times the normal volume traded. It reached a high of 45c before drifting back a little this week with the volume traded on one day at about 618,000 shares," a broker said.
"I guess people are so used to it they can't be bothered doing anything about it and it's a major exercise to trace things."
Chairman Richmond Paynter said he had no idea what was behind the buying but understood it had been from a number of sources. He had been involved in putting together the deals.
"When you are dealing with a number of people in different firms it might be a case of someone seeing who was coming and going and making conclusions," Mr Paynter said.
Eforce has announced an agreement to acquire international supply chain management specialist Product Sourcing International (PSI) and web development agency Imagic.
The combined businesses would double the size of Eforce and provide it with first-year revenue of more than $50 million, the company said.
Product Sourcing's shareholders will become the largest shareholding group in Eforce.
The acquisitions are subject to due diligence and shareholder approval at the Eforce annual meeting in May. If approval is given, settlement is planned for the end of May. Eforce expects its combined revenue for the year ending February 28, 2001, including the new acquisitions, will be $54 million.
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