Forum Archive Index - July 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

Thank you, Peter!

 

Your number of about $ A 140 mill. valuation of the DAD data bases is bound to have been queried by the BCH Board, I think!

 

DAD wants the merger decided by existing share prices. They are saying that this reflects a valuation of BCH, I suppose.

 

Let us have a look at some of the data:

                             BCH (NZ $)                   DAD($A)

                         99    2000   2001F         99    2000   2001F

Profit( m)          13.5   15.7   18.5            8.5     4.2    12.2

 

Goodwill( m)                2.3                              38.7

 

Data Bases, value(m) 21.3#                           139.3# #

 

# The last valuation was $ 33 mill. in 1997. Any work done on BCH data bases is usually written off. The buying of a new data base could result in an increase of valuation.

 

# # DAD says that any costs on maintaining these data bases " is expensed with ".

 

 I am reading this as ( my words ):

" These costs are part of the valuation, ie. they are added to the overall valuation as the work gets done, be it sloppy or value adding ".

 

Comment: It is clear that the method of valuing data bases owned by BCH, results in undervalued data bases compared with those owned by DAD. In any case, an $A 140 mill. valuation is staggering.

The BCH Board should have a good idea as to what the DAD data bases are worth.

 

Considering that DAD is ignoring this, we shall deduct $ A 62 mill. from the DAD valuation of the data bases, leaving a still high valuation of $A 76 mill.

 

We now add the $ A 62 mill. to the $ A 38.7 mill. Goodwill ( see table ), and the sum deducted is some $ A 101 mill. or $ A 1.00 / share. ( DAD has 101 mill. shares.).

 

At present the takeover is based on 1 BCH = 1.5 DAD share, based on DAD = $ A 6.50. We need to add the $A 1.00 or 0.15 DAD share to the 1.5 DAD share.

---

1. Therefore, BCH holders should be getting 1.65 DAD shares for every BCH share!

 

2. BCH is very highly rated in the financial world while DAD is relatively unknown. Because of this, some additional value ought to be accorded to BCH: This issue is important in a merger!

 

3. DAD's profits have also been very variable, they can't be compared with the steady 20-22% compound rise which BCH has. And although an improving profit is forecasted for DAD in 2002, there is more risk here!

 

We have ignored items (2) and (3) but suggest that:

 

                         1 BCH = 1.65 DAD  

 

Who said that it is only DAD which can horse trade?

 

And who is trying to push down the share price of BCH by selling!

 

Gerry            

Holds BCH