In a move calculated to raise a few more hackles in the City over US companies that go public in London rather than New York to avail themselves of the less stringent listing requirements, the chairman of Orchid Technology Inc, Fremont, California has sold 655,000 of his shares in the company at a premium of 80 cents or so over the price at which the shares are trading in London. The buyer is Wearnes Technology Pte Ltd of Singapore, the company that is partnering David Lee in his bid to take Qume Corp, another computer peripherals and add-ons company, private. Orchid is one of that small but brassy band of US companies that decided the listing rules made it much more attractive to float in London – typically on the Unlisted Securities Market, although one or two have gone for the Full List, and then proceeded to demonstrate why no-one should have touched their shares with a bargepole. Most notorious of course is International Signal & Control Plc; others include Mrs Fields Inc and Lexicon Inc; only Borland International Inc has managed to turn itself into an attractive play – and that only after giving its long-suffering shareholders two or three years of pain. Wearnes has increased its stake in Orchid to 29% by paying $2.35 a share – against the equivalent $1.55 at which they are trading in London – for 17.4%, buying from chairman Le Nhon Bui and other holders. Hey, we hear you ask, when you buy a block of a company’s shares at a premium, don’t you have to offer the same price to all the shareholders? Quite right – but only if the target company is UK-registered: if it is foreign, even if its only listing is in London, the rule does not apply. All of which will do nothing to alleviate the emetic effect on shareholders seeing the chairman cashing in a substantial part of his chips at a price well in excess of the best they can get. In its agreement with Orchid, Wearnes committed not to increase its stake beyond 29% for a year or take it above 40% in the following two years. Orchid hopes to benefit from Wearnes’ manufacturing capacity.
