Baycorp offer has spurred market

A counter-offer topping Australian private equity fund Allco's bid for control of debt management and credit services company Baycorp Advantage is unlikely, analysts say.

Last week, Allco spent A$136 million ($153 million) grabbing a 17 per cent stake in Baycorp and offered A$3.50 a share off-market for half of the remaining shares, which would take it to about 58 per cent.

Shortly after that, Baycorp's dual-listed shares quickly surged past Allco's offer, on what some saw was the prospect of a counter-bid from one of the international credit checking giants - Experian, Equifax or Trans Union International - or another private equity firm.

But ABN Amro Craigs broker Matt Willis was doubtful the market was expecting another offer. Instead, he believed Allco's offer had merely opened the market's eyes as to what might be fair value for the company, which has struggled to make ground in the market since its 2001 merger with Sydney firm Data Advantage.

"If they've got their numbers right, and I'm assuming these guys have, it does endorse the value opportunity that's probably there."

Having now completed the troublesome process of bedding in Data Advantage and with its debt at low levels, the company which enjoys "strong free cashflow" was in a position to consider its options.

"It stands to reason there is going to be capital management of some description. That's clearly what this crowd [Allco] have identified and are trying to perhaps take advantage of.

"If nothing else it's an endorsement of unrealised value, for a private equity company they look for big value gaps not small ones."

ASB Securities' Stephen Wright agreed that with the stock already trading at a premium to valuations there was little chance of a counter-offer.

Meanwhile, Baycorp has reaffirmed advice to shareholders to take no action on Allco's offer. The company's board was still examining it.