KEY POINTS:
Kiwi entrepreneur Peter Maire has brokered a deal aimed at building a $500 million global payment technology business.
Maire, chairman of NZX-listed eftpos terminal maker Cadmus Technology, had the initial idea to merge the company with its part-rival Provenco.
Provenco and Cadmus posted revenue last year of $170.9
million and $25.4 million respectively, although Maire has set his sights for a merged company on a much bigger goal.
"To be a significant player we have to be thinking, 'How do we get to $500 million in sales?' - that's the sort of magnitude we have to think," Maire said. "It's exactly the same game we'll play as we played in Navman."
Maire founded navigation technology company Navman in 1986 before selling it to American marine and leisure products giant Brunswick in 2004 for $108 million.
"My past experience is that small companies grow slowly [and] technology companies really can't afford to grow slowly because unfortunately intellectual property rusts very, very quickly," Maire said.
"We have to put the management teams together and craft a plan that makes us a significant company in the future and it doesn't want to be too far in the future.
"You've got to be there in three to four years."
The boards of both companies have recommended the proposed merger.
Cadmus shares closed down 2c yesterday at 16.5c, while Provenco closed up 6c at 69c.
The proposed merged business, whose name is yet to be decided, will remain listed on the NZX, with one share exchanged for each Provenco share and one for every 4.6 shares in Cadmus.
Maire took over the chairmanship of Cadmus after the resignations in March of chairman Keith Phillips and managing director Ian Bailey.
The board of the merged company would include representatives from both firms, although Maire had no intention of being chairman.
"I don't want to be chairman of any company," he said.
He does, however, intend rolling up his sleeves to help the business.
"I enjoy being a director of a company but my role in all the companies that I'm involved in is much more than that ... I get deeply involved in both product and market strategy."
Cadmus and Provenco directly compete in the domestic eftpos terminal market, which is only between 15 and 20 per cent of Provenco's business.
Provenco supplies petrol station technology - including pump, shop and back-room systems - to about 6000 service stations in 23 countries, with about 12,000 EMV compliantoutdoor payment terminals in countries including Hong Kong,India, Belgium and Malaysia.
Provenco had a well developed global footprint in many markets, Maire said.
"Cadmus, of course, has got a lot of payments hardware technology that Provenco doesn't have which it actually needs, particularly to support its oil industry payments," he said. "There's tremendous synergy between the two businesses in that respect."
ABN Amro Craigs research analyst Mark Lister said the merger made sense, was probably not a greatsurprise and it should be well received.
"They obviously made no secret that at least from the Cadmus side there was some interest there in talking last year," Lister said.
Both companies had delivered less than they had promised, he said.
"I don't think that's because they don't have the potential, it's just a tough sort of business to be in."
The two firms controlled about three-quarters of the local eftpos terminal market, but Lister did not think they would have any regulatory problems.
Provenco acting chairman Rick Christie said the merger would create a stronger New Zealand-owned entity in the international technologysector.
"I think it was sort of almost inevitable that with the change in approach of Cadmus since Peter Maire became involved that it really quickened our interest in doing something with Cadmus and I think pretty much vice versa."
