Registrar & Transfer Company Bought by Computershare
While smaller stock transfer agents have been gobbled up by larger ones for years, Computershare’s acquisition of Registrar & Transfer Co. (“R&T”) announced on May 1, 2014 surprised us a little – not so much because it happened, but because it happened now.
R&T’s Chairman and CEO Thomas Montrone, majority R&T shareholder and industry veteran (e.g., past President of the Securities Transfer Association), did not seem ready to “call it a career.” He had steered his impressive if modest-sized firm (925 issuers and 700,000 shareholders) to a position where it could offer a more “manageable” alternative to the mega-agents like Computershare, in a marketplace increasingly hungry for such choice.
Of course, we weren’t the ones being offered $37.3 million for the company! That price is considered good for Computershare and “a lot of money” for R&T and Montrone – two times annual revenue of $19 million.
Like other mergers of this kind it will require a) regulatory approval – a slam dunk we think, when the feds get around to it – and b) the unhurried blending of staff (183 people), systems and facilities; i.e., quite a few months. That said, R&T will undoubtedly have disappeared by the end of 2014.
The consequences?
- A 16.7% decline in full-service U.S. transfer agents (six to five)
- The commensurate and obvious decline in competition
- A relative “up-sizing” of the remaining players
- A possible increase in pricing, and tandem lessening of procedural/contractual flexibility
Regarding this last point, however, we do not think we are “there” yet. Five major competitors is still a healthy number. Even four would be. And we think there will be at least that number for years to come.
Still, issuers and “watchdogs” like us need to remain vigilant, so hubris and all that flows from that doesn’t develop within the remaining agents individually, or as a group. We certainly plan to keep an eye on things.