Investors wary of Baycorp offer

Baycorp shareholders are still playing hard to get as they look around for a more attractive suitor following Allco Equity Partners' revised takeover bid for the credit information firm.

Allco, a listed private equity firm, raised its offer late on Friday to A$3.52 ($3.85) and extended it by 14 days. Allco will also toss another 7c a share into the pot if it secures acceptances taking it above 35 per cent and voting rights in excess of 50 per cent by Thursday this week.

Allco's previous A$3.50 offer was for Baycorp's shares including an 8c dividend declared on August 19.

The new offer is for Baycorp's shares ex-dividend, effectively making it a 10c increase on its first bid or 17c with the extra payment.

While independent valuer Lonergan Edwards recently valued Baycorp shares at A$3.92 to A$4.31, Allco managing director Peter Yates said the revised offer was substantially above Baycorp's average trading price before the bid was announced.

"We urge all shareholders to accept the offer without delay - it is the only one on the table," he said.

"There has been more than enough time for Baycorp to solicit a credible counter-proposal and they have been unable to do so."

But Allco sources said yesterday that acceptances so far had been "negligible".

Tom Elliott, managing director of hedge fund MM & E Capital, which owns about 1 per cent of Baycorp, said: "We're going to have a think about it. Our feeling is there still could be another player in the wings."

Goldman Sachs JB Were institutional operator Jeremy Coe said the market was "somewhat unimpressed" at Allco's new offer.

"There's a bit more time for some-one else to come in. I still think that's probably what people are hoping for."

But Allco has also finalised its agreement with major shareholder Lazard Asset Management, securing its 10 per cent Baycorp holding, which gives Allco a 17 per cent unconditional stake.

That would make Allco a "hostile minority shareholder" to any prospective counter-bidder, discouraging another offer.

Meanwhile, British credit check business Experian has indicated it believes Baycorp is fully priced, according to a report in the Australian Financial Review, making it an unlikely counter-bidder.

Elliott was not bothered by the prospect that Allco might succeed.

"Our fallback position was we didn't think the Allco offer was that bad. We think Allco would manage the company quite well."

Allco has said that if it gained control of Baycorp it would restructure the company, offer better management and return A$1.18 cash a share to investors.

Baycorp has struggled since the merger of New Zealand's Baycorp Holdings and Australia's Data Advantage in 2001 but managing director Andrew Want has said the company is now positioned for "major change and accelerated growth".

Baycorp's chairman, Glenn Barnes, said last week that shareholders should take no action on Allco's revised offer. Baycorp's independent directors are considering the new offer and will provide advice to shareholders this week.

Baycorp's dual-listed shares closed unchanged at $4.01 yesterday in New Zealand and were at A$3.62 in late-afternoon trade on the ASX.