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EDITORIAL: Success made Banks a target

Barbados Nation

EDITORIAL: Success made Banks a target

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The news that Banks Holdings Limited, the company that produces prize-winning Banks Beer, was the subject of a takeover bid by regional interests must have sent shivers down the patriotic tastebuds of all Barbadians, who could be forgiven if they have asked themselves if nothing is sacred.

No matter the significance and the advantage of regional market and common economic space, this particular company has been long identified with the Barbadian landscape and is a premier Barbadian product.

The origins of the company here were an early example of local shareholder participation with shopkeepers and other small investors having been encouraged to take a stake in their company, so to speak.

The present shareholding reflects a large number of small shareholders present in the matrix of owners of the company. No less than 35.4 per cent of the shares are held by what is described in the documents as smaller shareholders. Yet the disclosures indicate that the majority of the shares are already held by non-Barbadian interests.

SLU, the bidder which now owns 40 per cent; Blue Waters of Trinidad, 11.8 per cent; Banks DIH, 6.7 per cent; and the Sagicor Financial Group, 6.7 per cent, make up the total shareholding with the smaller shareholders.

This picture of shareholding makes clear that investors both small and large recognise Banks Holdings as a good investment of their money, and there will be many murmurings that we should have tried to keep it in local hands.

Whether or not that might be desirable, the fact is that the market is a voracious animal and investors are always on the lookout for companies in which they believe they can make a greater return.

In a manner of speaking, we have lost the Barbados National Bank and the Insurance Corporation, together with the Barbados Shipping & Trading company to the Massy Group of Trinidad in recent times. And while these transactions may be justified on the regional common market space argument, it does not follow that what might be good for the non-national bidder fits with the national interests.

We have to face the fact that this island, though not the smallest of these islands, is indeed small. We may have been said to punch above our weight but with such a small market space we cannot afford to become ringfenced and isolated and separate and apart from our neighbours. Indeed, the majority of our exports are to the regional market.

The reality is that in the face of limited capital for investment, our local companies have done well. Our corporate managers have demonstrated competence and expertise in managing even in difficult circumstances. They have done much with relatively little. But it is this success which, though very desirable and beneficial to the national economic interest and to the psyche of the Barbadian, makes them attractive targets for investors with larger pockets and access to finance.

Given the democratic tenets of our economy, we cannot stop takeover bids aimed at our companies while we pursue similar approaches in the region. The best we can do is to ensure that the practices and policies of inward investors are not inimical to the interests of our country. For a start, we may have to carefully examine the bases and principles on which we value the shares of our companies.