Exchange lets Xero go without a fight

The New Zealand stock exchange operator, NZX, has turned down an appeal from Auckland-based fund manager Milford Asset Management to intervene in Xero’s planned delisting.

Milford investment head Brian Gaynor wrote to the NZX on Thursday, asking it to force Xero to put its surprise decision to delist from the NZX to a shareholder vote.

As an alternative, he said the NZX could oblige Xero to buy back shares for $34.05 a share, which was the price its shares were trading at before the delisting decision.

But the NZX said in a statement yesterday that it had approved Xero’s plan to delist without requiring a vote, explaining that the rights of Xero shareholders would be ‘‘substantially unchanged’’ by the delisting decision.

The NZX agreed it could have demanded a vote, but said it was ‘‘standard practice’’ not to do so under the circumstances of Xero’s departure.

Kiwi shareholders’ holdings in Xero will be automatically transferred to the Australian register, and the NZX noted they would ‘‘readily be able to trade Xero’s shares through New Zealandbased brokers’’.

There was no legal requirement for Xero to hold a shareholder vote, and the company would remain subject to the New Zealand Companies Act and Financial Markets Conduct Act, which ‘‘provided key shareholder protections’’, the NZX said.

Xero announced on November 9 that it would terminate its NZX listing on January 31 and switch all its sharetrading to the Australian stock exchange where it has a dual listing.

Gaynor said Milford about $10 million of Xero shares in a passive fund that tracked the NZX top 50 and believed the delisting decision was the biggest factor behind a 7 per cent fall in Xero’s share price.