Statement of reasons of Takeovers Panel
This notice, which comes into force on 18 October 2001, exempts Data Advantage Limited and its wholly-owned subsidiary Aqua Advantage (New Zealand) Limited, subject to certain conditions, from complying with rule 6(1) of the Code in respect of the acquisition by them of all of the shares in Baycorp Holdings Limited as a result of a merger proposal entered into pursuant to Part 15 of the Companies Act 1993.
Data Advantage and Baycorp intend merging to form 1 group. Following the proposed merger, Data Advantage will become Baycorp's parent company. Under the agreed terms of the merger, it is proposed that Data Advantage exchanges 1.56 shares in itself (new Data shares) for every 1 existing Baycorp share (Baycorp shares). The Baycorp shares will be transferred to a New Zealand subsidiary of Data Advantage as consideration for the issue of new Data shares to those holders of Baycorp shares. The New Zealand subsidiary of Data Advantage and Baycorp will subsequently be amalgamated with the surviving entity being Baycorp and the Baycorp shares will be cancelled.
Data Advantage and its associates will accordingly, as a result of this transaction,
“hold or acquire” more than 20% of the voting rights in Baycorp.
The merger is to be by way of a scheme of arrangement under Part 15 of the Companies Act 1993, by court order, and subject to a resolution of Baycorp shareholders being passed by the requisite majority set out in this exemption.
The merger of Data Advantage, through its wholly-owned subsidiary Aqua Advantage (New Zealand) Limited, with Baycorp is subject to the Code because it is to be effected in a manner that results in the voting control of Baycorp being acquired by Data Advantage.
The Panel has decided that any application for the granting of exemptions from the Code to allow the achievement of a takeover through a scheme of arrangement under Part 15 of the Companies Act 1993 should be treated on its merits, with the Panel having particular regard to the extent to which the terms of the scheme are consistent with the objectives of the Code and the disciplines of the Code.
The Panel has received, at its request, a statement from Baycorp explaining why the merger was sought to be effected by means of a scheme of arrangement under the Companies Act 1993 rather than as a takeover offer made pursuant to the Code.
The exemption is appropriate because it will enable the merger of Data Advantage and Baycorp (if the merger is approved by the requisite majority of shareholders of both companies) to be achieved in a manner that is commercially efficient for the 2 parties while retaining adherence to the disciplines and objectives of the Code.
The exemption is consistent with the objectives of the Code because—
•the merger proposal provides for fair treatment of all shareholders of Baycorp in that all shareholders in Baycorp will receive shares in Data Advantage on the same terms; and
•the merger proposal provides for the provision of information and of advice (from an independent adviser) to the shareholders of Baycorp that is consistent with the information that would have been provided under a Code offer; and
•from the point of view of the international competitiveness of the New Zealand capital markets and harmonisation with the business rules in Australia, it is important that similar transactions should be able to be carried out in a similar manner whether in New Zealand or Australia.