KEY POINTS:
Shareholders in payments technology firms Cadmus and Provenco have voted resoundingly to merge the two companies, creating a new firm worth an estimated $80 million.
Two special shareholder meetings held yesterday in Auckland saw 99.98 per cent of Provenco shareholders and 93.46 per cent of Cadmus shareholders agree to the merger - well above the required 75 per cent.
The new company, which has an interim name of ProvencoCadmus Ltd, will come into being on May 8.
Provenco chairman Rick Christie, who will chair the merged company, said the result enabled them to focus on creating a large global technology company based in New Zealand.
"We're really ready to move and I think you'll see quite rapid movements as far as getting the company into good shape is concerned."
Christie said the combined companies will have increased scale and the opportunity to benefit from operational and marketing synergies.
Cadmus chairman Peter Maire, the driving force behind the merger that was mooted last year, told shareholders the merger would have benefits for both companies.
He cited keen interest from Australian banks in Cadmus' direct-to-market model for its technology, that was tempered by concerns about the company's size.
Provenco and Cadmus posted revenue last year of $170.9 million and $25.4 million respectively but net losses of $5.2 million and $4.5 million. Independent experts value the combined entity at $81.3 million, based on both companies' shareholder book values as at June last year.
Cadmus director Jim Doyle, who will be chief executive of the merged company, told shareholders that he expects the new entity to realise cost savings of $7.6 million "very, very fast".
Most of this would be realised through removing staff overlaps in the two companies, particularly in the payments division, he said.
The two businesses already have a strong presence in New Zealand, Australia, Singapore and Malaysia. Christie said business expansion in India and China - which have yet to prove fruitful - is still on the cards.
During the special meeting for Cadmus shareholders, the board took some heat from investors over what some saw as the understatement of the risks involved in the merger.
Small shareholder David Gall said the merger made sense, but was concerned over Provenco's loss-making operations. He was also concerned as to the purpose of a planned $15 million capital raising exercise post merger.
"The $15 million that they will have to raise does nothing for further product development, research and development, or marketing for either the company singularly or the joint identity of this company - it goes to pay off existing problematical debt."
Shares in Cadmus closed unchanged at 9.8c, while Provenco shares closed at 40c, up 1c.
Cadmus shareholders will get one share in the new company for 4.2 of their existing shares. Provenco shareholders will get one for one.
ALL SYSTEMS GO
* The merger needed 75 per cent shareholder approval - 99.98 per cent of Provenco shareholders and 93.46 per cent of Cadmus shareholders voted "yes".
* The merger takes effect on May 8.
* Independent experts estimate the combined worth of the merged companies to be $81.3 million (based on June 2007 shareholder book values)
* The CEO will be Jim Doyle with five directors (Rick Christie, Peter Maire, Robert Bryden, Thiam Beng Lau and Christopher Morrison) already on board. Two more directors will be appointed soon.
