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Of Bulls & Bears

Friday 15th December 2000

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Wrong address for National Mail

Ferdy wonders who bought National Mail shares at 44c following an "announcement pending" notice on Monday morning. This monumentally dumb move would have delivered a 77% paper loss just 24 hours later. Immediately after the notice was issued the stock shot up 13%, or 5c, to 43c, albeit on volume of only 26,500 shares. It seems some investors got it into their heads the company would announce something positive such as a big new contract. Instead National Mail told the Stock Exchange at around 4.30pm it would stop distributing mail due to unacceptable trading losses. By the close of trading on Tuesday the shares had fallen 33c to 10c.

One broker noted there had been unusually heavy volume in National Mail shares in the last week. "It would be interesting to see who the sellers are," he said. The company has around 500 shareholders. Hardest hit will be founder Paul Meier, of Prestige Marketing fame, who held 45% following the company's $1.25 a share public offering and float last April. Also saddened will be chief executive Anthony Fowler, with 7.9%, and Auckland sharebroker and former National Business Review journalist Steve Ellis, with 10.3%. Mr Ellis was the organising broker for the float and took payment in shares.

Richard nicks 'Eric's bank'

Eric Watson has made his fortune rolling up small companies operating in the same sector to form one big one. Recently dubbed "Eric the Aggregator" by the Australian Financial Review, he has been so successful that lookalikes are springing up to give him a run for his money. This week he missed out on a whopper when family-owned Pyne Gould Corporation announced it had bought Frontline Finance for $20 million and Marac Finance for an undisclosed sum. It will merge Frontline with its own Allied Finance but will operate Marac separately. The three will have combined assets of $660 million and the synergies are obvious. Managing director Richard Elworthy said there would be no further moves for a while but "clearly if this business is successful for us we'd look to expand it."

The deals drive a stake through the heart of Mr Watson's ambitions, revealed in the February 11 National Business Review, to weld together a big finance company. The idea then was to merge Frontline with Pacific Retail Finance and BSG (Blue Star Group) Finance to form a $440 million company with the scale to compete with industry heavyweights such as UDC, AGC and Rabo Wrightson. "There's such a lot of lending banks don't get involved in for which there is huge demand," he explained.

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