Computershare: Going Global Through Acquisitions
2002 | Case No. IB28
This case explores the challenges Computershare, a share registry firm, faces while trying to grow globally through acquisitions. The case outlines Computershare’s phenomenal growth since its founding in 1994 in Melbourne, Australia. By 2001, the company’s market capitalization had risen to more than A$3 billion and Computershare employed over 5,000 people worldwide (from 54 in 1995), mostly in Australia, New Zealand, the U.K., South Africa, Canada, the U.S., and Hong Kong. The company grew sales revenue from A$13.3 million in 1995 to A$724.6 million in 2001, and EBITDA from A$7.6 million in 1995 to A$151.6 million in 2001. However, by December 2001, Computershare’s stock price had fallen from a year’s high of A$9.90 per share to A$4.50 due to concerns about the company’s short-term earnings prospects. On January 20, 2002, Computershare issued a notice to the market, warning investors about the full year 2002 profit result. The market responded to the profit warning badly. The company’s share price fell 34 percent from A$5.39 on January 9 to A$3.75 the following day, wiping out A$1 billion in market capitalization. Industry analysts reacted by downgrading earnings for the company and recommending investors to “reduce,” “hold,” or even “sell” Computershare stock. The case asks students to develop a strategy for Computershare to overcome its difficulties and to devise a future strategy to prove to investors that Computershare could become the number one global share registry.
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