Provenco and Cadmus agree to merge

New Zealand's two major payments technology companies, Provenco and Cadmus, yesterday announced a plan to merge. The widely anticipated move comes after both companies released disappointing results for the 2007 financial year.

Point of sale terminal maker Cadmus, now under the leadership of chairman Peter Maire, has been restructured and refocused onto research and development.

Maire says the two companies fit well together and he does not anticipate extensive overlaps or the realization of big cost savings through the merger.

A statement from Provenco's acting chairman Rick Christie said that both companies are committed to investing significant sums internationally in what would have been overlapping technology and markets. Christie also said Provenco would benefit from the involvement of Maire (who without doubt will become chair of the merged company), who developed and made a fortune out of the Navman marine navigation technology.

Peter Maire says the merger will provide a stable platform for international growth. "This will rationalize that global go to market cost, it is a phenomenally expensive thing to do."

Cadmus has a foothold in India through its terminal deal with ICIC Bank, while Provenco's pay at the pump product is being slowly rolled out in south-east Asia.

Shareholders of both companies will vote on the proposal in December. The so-far unnamed company (referred to in documents as "MergeCo") will be listed on the New Zealand Stock Exchange.

Provenco shareholders will get one share in the new merged company for every one Provenco share they now hold, while Cadmus shareholders will get one new share for every 4.6 Cadmus shares they now hold.

The companies reported combined revenue in the year to June 2007 of NZ$196 million, with NZ$171 million of that reported by Provenco. The pair reported combined losses of $9.7 million, with the honours more evenly split.