09-16-2007, 06:13 AM
FRANKFURT (AFP) - Many European groups that staged high-profile share listings on Wall Street in the 1990s are now slipping out the back door, giving up a fleeting status that turned out to be expensive and restrictive.
"The company is taking on a transnational dimension," German chemical giant BASF boasted during its New York debut in 2000, while energy group E.ON hailed its entrance "into a global era" amid great fanfare on Wall Street.
Their departure this year, along with that of aspirin maker Bayer, promises to be much more discreet.
Several European groups have made the same decision however. The French groups Danone, Publicis and Suez have also given up Wall Street listings. In Switzerland, Adecco did the same, as has British Airways.
They all took advantage of an easing in US Securities and Exchange Commission (SEC) rules that made leaving Wall Street behind very difficult.
Foreign companies used to be required to show they had fewer than 300 US shareholders to abandon a US listing, and the detailed tallies had to be repeated on a yearly basis.
Since late March however, a company must only show that trade in its US-listed shares was no more than 5.0 percent of its total worldwide, which experts say is much easier to do.
Most companies say they want to give up trading in the United States because the costs are high compared to the thin volumes.
"All wanted to make their shares more attractive by going to New York," but aside from exceptions like profesional software group SAP or Deutsche Telekom, which is very active in the United States, "none realised significant volumes," said Gerrit Fey, an economist at Deutsches Aktieninstitut (DAI), a lobby group in the German financial sector.
Adecco said that in the end, less than 2.0 percent of its shares traded in New York.
"It is much easier today for American investors to come directly to European markets like Frankfurt, Paris or London via electronic exchanges," Fey explained.
Wall Street listings are also expensive and Bayer has said it would save 15 million dollars (10 million euros) per year by eliminating US-traded equity.
But probably the most likely, though unacknowledged, reason to leave New York is to escape scrutiny by the powerful SEC that grew heavier with the adoption of the Sarbanes-Oxley Act in 2002.
The legislation was passed following financial accounting scandals at companies like the energy group Enron and telecommunications operator Worldcom.
The SEC imposed strict accounting standards that conformed to US Generally Agreed Accounting Principles (GAAP), and strengthened oversight regarding good governance in general.
Siemens, for one, paid the price. Caught up now in a string of alleged corruption cases, it is concerned the SEC could levy a heavy fine in addition to any German legal penalties.
A spokesman for the German conglomerate nonetheless said that pulling out of the New York Stock Exchange "was not on the agenda."
And companies like Bayer that did decide to leave vow to investors that directors will "maintain a high level of (financial) transparency."
"The company is taking on a transnational dimension," German chemical giant BASF boasted during its New York debut in 2000, while energy group E.ON hailed its entrance "into a global era" amid great fanfare on Wall Street.
Their departure this year, along with that of aspirin maker Bayer, promises to be much more discreet.
Several European groups have made the same decision however. The French groups Danone, Publicis and Suez have also given up Wall Street listings. In Switzerland, Adecco did the same, as has British Airways.
They all took advantage of an easing in US Securities and Exchange Commission (SEC) rules that made leaving Wall Street behind very difficult.
Foreign companies used to be required to show they had fewer than 300 US shareholders to abandon a US listing, and the detailed tallies had to be repeated on a yearly basis.
Since late March however, a company must only show that trade in its US-listed shares was no more than 5.0 percent of its total worldwide, which experts say is much easier to do.
Most companies say they want to give up trading in the United States because the costs are high compared to the thin volumes.
"All wanted to make their shares more attractive by going to New York," but aside from exceptions like profesional software group SAP or Deutsche Telekom, which is very active in the United States, "none realised significant volumes," said Gerrit Fey, an economist at Deutsches Aktieninstitut (DAI), a lobby group in the German financial sector.
Adecco said that in the end, less than 2.0 percent of its shares traded in New York.
"It is much easier today for American investors to come directly to European markets like Frankfurt, Paris or London via electronic exchanges," Fey explained.
Wall Street listings are also expensive and Bayer has said it would save 15 million dollars (10 million euros) per year by eliminating US-traded equity.
But probably the most likely, though unacknowledged, reason to leave New York is to escape scrutiny by the powerful SEC that grew heavier with the adoption of the Sarbanes-Oxley Act in 2002.
The legislation was passed following financial accounting scandals at companies like the energy group Enron and telecommunications operator Worldcom.
The SEC imposed strict accounting standards that conformed to US Generally Agreed Accounting Principles (GAAP), and strengthened oversight regarding good governance in general.
Siemens, for one, paid the price. Caught up now in a string of alleged corruption cases, it is concerned the SEC could levy a heavy fine in addition to any German legal penalties.
A spokesman for the German conglomerate nonetheless said that pulling out of the New York Stock Exchange "was not on the agenda."
And companies like Bayer that did decide to leave vow to investors that directors will "maintain a high level of (financial) transparency."