KEY POINTS:
One of the New Zealand sharemarket's hot stocks of the 1980s, Baycorp, now Veda Advantage, looks set to delist after directors recommended a $923 million offer for the company from a private equity consortium.
The dual-listed credit records company and the consortium comprising of Pacific Equity Partners (PEP)
and Merrill Lynch Global Private Equity, yesterday announced an offer for all of Veda's shares through a scheme of arrangement. The proposal requires just 75 per cent of all votes cast instead of the normal 90 per cent shareholder approval for a takeover.
Veda said the proposal followed discussions with the consortium which has been conducting due diligence on the company.
The cash offer of A$3.61 ($4.09) a share values the company at A$814 million ($922.63 million).
Veda shares rose 29c to $3.98 yesterday on the New Zealand market.
The company's independent directors have endorsed the proposal, saying it "represents a compelling price for Veda Advantage shareholders".
In the absence of a better offer, they are recommending shareholders vote in favour should independent experts Lonergan Edwards give it a tick.
PEP managing director, Anthony Kerwick, said the due diligence process had reinforced the consortium's view that Veda Advantage was a high quality business that would perform well under private equity ownership.
The consortium said it would seek to "retain the involvement" of current management if the proposal succeeds.
Kerwick said the offer, made in spite of additional costs incurred by the rebuild of the company's New Zealand bureau IT systems, "represents a very full price for the company".
"We ... have received indications of support from significant shareholders."
That includes 17.3 per cent owner Allco Equity Partners which yesterday said it intended to vote in favour of the proposal.
Allco made a A$3.52 a share offer for 50 per cent of Veda in 2005 after acquiring a cornerstone stake from a New Zealand institutional investor. The bid lapsed in October 2005.
Allco and Deutsche Bank Capital Partners bought Baycorp Advantage's New Zealand debt collections business in 2006 for $117 million.
Veda advantage
* Transtasman credit records company which derives about 20 per cent of its revenue from New Zealand.
* Changed its name from Baycorp Advantage late last year.
* Baycorp Advantage was formed by the 2001 merger of New Zealand's Baycorp and Australia's Data Advantage.
* Baycorp listed in New Zealand in 1986 and was founded in 1956 in Lower Hutt.