Every year around this time – for 16 years now – we’ve been reporting on the “T-A Merry-Go-Round”, which has been whirling faster and faster every year – at least where the competitive scene is concerned.
This year, the competitive merry-go-round seems to have gone almost wild – with clients falling off and spinning off at a record rate, mostly to land on a new merry- go-round. A record number of prominent industry employees are also flying off – and sometimes being thrown off their old merry-go-rounds – while a virtual whirlwind of change is whisking many seasoned work horses onto new merry-go- rounds, also at a dizzying rate.
Meanwhile, as you will read more about below, there has been a major new entrant to what looked to many observers (but not to us, as regular readers know) to be a rapidly consolidating business…And we predict, once again, that the dealing is far from done.
Let’s start off, as we usually do in this issue, with a report on “who went where on the client side” in 2009:
At first blush, Wells Fargo Shareowner Services seems to have been the biggest winner by far: They added a dizzying double-carousel-load of household names…like Fortune Brands, HCP, H&R Block, Heinz, Omnicom, Xcel Energy and Zale Corp. from BNY-Mellon… and Fiserve, HNI Corporation, St. Jude Medical and Walgreen Co. from Computershare…plus 29 names - like American Greetings, Anixter, Briggs & Stratton, Flowserve, Gardner Denver, Moog, Parker-Hannifin, The Timken Co. and Worthington Industries from National City, in the aftermath of the sale of the Nat-City business to Computershare, to name just a few.
But Computershare, which now seems to have its legs solidly under itself again, after a rough patch following their big records-conversion effort, racked up some big wins too: They took the Frontier Communications account from Illinois Stock Transfer, as their long-term client, Verizon, Inc., prepared to spin-off their interest in Frontier. This will result in over 700,000 new Frontier shareholders this summer.
They won the Global Fiscal Agency appointment for the State of Israel away from BNY-Mellon, which involves paying interest of over $1 billion per year to bondholders in the U.S., U.K., Canada, and throughout the world. As with the Frontier deal, Computershare reaped additional business from its existing client base, like the spinoff of AOL from Time Warner and CareFusion from Cardinal Health – and also logged a few additional wins from BNY-Mellon; Commscope, Healthsouth and Weingarten Realty.
BNY-Mellon also managed a few nice wins – the Sun/Oracle merger processing, for eg., where they had been the T-A for Sun, but ended up winning the Oracle business too – along with Dunn & Bradstreet, from Computershare. They picked up a few smallish accounts from AST and added three nice west-coast community banks. But their really big wins were the Norfolk Southern (80k holders) and Southern Company (180k) businesses – both former in-house agents. Watch for more action on this front from all the bigger T-As, as in-house providers grapple with cost-basis reporting, back-up withholding, and constant forays to the corporate decision makers by T-As on the hunt.
At AST, 2009 seemed to be largely focused on internal change – with a new CEO and a new CFO, as reported here earlier, and with the founding Karfunkel family members having “left the building” as they say in show biz, in early 2010. Nonetheless, AST won “about half” of the IPOs they bid on in 2009, according to AST’s sales whiz Ken Staab – and they are doing better yet in 2010 to date. They also made big strides, Staab told us, in beefing-up and cross selling their “EPS” or Equity Plan Solutions to existing clients.
Continental Stock Transfer & Trust Company logged another very strong year, with “more than 50 mostly mid-sized issuers moving to CST” according to CEO Steve Nelson. They also continued to dominate the SPAC business, where they have more than 85% market share – and, despite the dearth of reorg work elsewhere on the TA scene, they handled more than 60 complex business transactions for SPACS, plus a reorg job for a large international bank that they handled on a “private label” basis.
Registrar & Transfer Company had its usual long-and- strong-list of new clients, adding 57 of them in 2009 – with a few nice “household names” like Coach, and Cullman – and with shareholder-oriented and service-oriented community banks from around the country making up the lion’s share of their new biz, also as usual.
On the whole, however, it was a difficult year for most of the biggest agents – with IPOs down, the high-margin reorg business down, earnings on balances way down, transaction volumes down, and continuing to dwindle as more and more investors opt for street-name registration, year after year…and lots of “troubled companies” – financially and otherwise. While yes, the merry-go-round whirled like crazy, some agents were largely spinning their own wheels when it came to adding net new business…and many of them ended up doing the same and sometimes more work for less money than they did in 2008.
Ironically, as we’ve noted here before, the long-awaited “consolidation” that was expected in the business has added to rather than decreased competitiveness – at least where pricing is concerned. And the “new reality” has made what were formerly thought of as “small agents” or “small-issuer- specialist- agents” a lot more viable as competitors than ever before, as we’ve also been noting.
Meanwhile (and see the article below) there has been a major new entrant…And, please remember you read it here first…we still say there’s a lot more “consolidation” to come…
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