FIN 403
Module 4
Dual Listing Companies on Multiple Stock Exchanges
What do you think are the main advantages and disadvantages of listing your company in different stock exchanges in different countries?
In today’s global economy, many companies consider listing their shares on multiple stock exchanges in different countries. This is a relatively safe way for businesses to explore international markets, generate and maintain interest in a multinational company’s shares. (Grant Thornton, 2008) Bayer, the German pharmaceutical company, began trading on the New York Stock Exchange (NYSE) in 2002 making the U.S the eleventh country along with Germany, Switzerland, France, Spain, Belgium, the Netherlands, Luxembourg, the UK, Italy, and Japan to list the company’s shares. (Rubery, 2002)
Listing on the NYSE made it easier for Bayer to expand in the U.S. Louise Wilson, managing director and head of international syndicate at UBS Warburg, said: "Getting greater access to U.S. investors is sometimes given as a reason for a U.S. listing, and it's a way for smaller companies to improve their profile. However, most significantly, it's a way to get acquisition currency." (Rubery, 2002)
Bayer spokesperson, Annette Josten, agreed. "If Bayer were to make an acquisition, it could pay for it in exchange for shares. We have no concrete plans, but this enables us to act quickly. It broadens our investor base, and increases transparency for U.S. investors. It also gives us the opportunity to launch stock option programs for U.S. employees." (Rubery, 2002)
International merger and acquisition (M&A) deals are candidates for dual listing stocks. This way, companies can avoid political arguments over which company and country comes away with the upper hand. Creating a dual listed company also gets around foreign ownership restrictions when one company's investors are not allowed to hold foreign shares. (Rubery, 2002)
Non-M&A related dual...