THE HOYOS FILE: Traumatised by shareholder drama
QUESTION: Why do you think Emera is suddenly going to all of this trouble to pull in those leftover shares in Emera Caribbean which it doesn’t already own? You know, at a 30 per cent premium over share price in a market with less movement than some of the characters in the movie Frozen? Well, to my mind, there is no ‘AmBev-alence’ about it. Sorry, but I am writing this late.
I am also writing this commentary after having to read more share offers and backraise ads than I would probably volunteer to do on any given day. We are talking AmBev, ANSA McAL, Banks Holdings Limited (BHL), Cable & Wireless, Liberty Global, and now Emera. Most of these documents have so much legalese as to make you wonder why you never tried law school.
So, to explain, Emera Inc. doesn’t want to get AmBev-ed by some other energy or venture capital firm with deep pockets, as BHL did five years ago with Latin Capital Fund 1. Now that they are showing their hand in investing in renewable energy, what would happen if, as they expect, they drive down the cost of producing electricity, increase demand by leaps and bounds and make tonnes of money? Which, having read their PowerPoint on the subject, seems to be the plan.
Then all some other stealth investor would have to do is make the National Insurance Board and the holders of the remaining seven per cent of Emera Caribbean (formerly Light & Power Holdings) a few good offers and, suddenly, a hostile investor is up in all of Emera’s business. Not enough to trigger a takeover bid, but too close for comfort. And what if the company needs to raise cash? That’s where it could get difficult.
Then there is the case of ANSA McAL, whose left brain should advise its right brain what it intends to do. If, having lost in your attempt to freeze the bidding war, you still say you are going to court over the fact that you will have to pay $10 for each BHL share owned by SLU Beverages Limited, then why do you keep backraising closer and closer to that price for the entire shareholding? ANSA late last week raised its offer to $7 per share to counter AmBev’s puny backraise a couple of days earlier of $6.20 to ANSA’s then $6.
So what is ANSA’s plan here? Surely it must realise that a company paying US$105 billion for SABMiller, which raised an earlier bid to that level from US$100 billion in a matter of a few days in order to ensure it got its prize, is unlikely to have trouble taking the BHL price all the way to $10 and beyond. I mean, even when ANSA was bidding against the then Neal & Massy for Barbados Shipping & Trading the shares went near that orbit. And those were just Trinidadian companies, not one of the biggest brewing companies in the world.
But, I have to tell you, the one that keeps me guessing all the time is Liberty Global’s takeover of Cable & Wireless Communications (CWC). Booker T & The MGs had a hit back in the 1960s called Time Is Tight and if they ever make a documentary about this particular takeover, then that will have to be the theme song. Time could not have been tighter here.
Just one year ago, the then CWC announced a takeover offer for Columbus International. The deal was done and became reality, with all the regulators approving with a few caveats. So on April 1, the newly merged entity greeted the dawn. By June, the main shareholder of the former Columbus, John C. Malone, had set up a tracking stock with the express purpose of providing a landing berth for his re-acquisition of Columbus plus the new CWC.
So did Malone have all this somewhere in his mind all along, or did he just make a whole lot of decisions on the spur of the moment? On April 1 was it a case of “here I go in my exciting new role as a minority shareholder in CWC when I am the king of cable in Europe?”. And then, a few weeks later, was it a case of “hey, maybe I should just buy the whole darned thing!”
Talk about turning on a dime! If that were the case, I wonder how long it then took for the company to realise the following: “Liberty Global expects to generate synergies as a result of the integration of CWC and the LiLAC Group businesses. Areas of opportunity include savings related to elmination of public company expenses, further corporate and administrative rationalisation of existing LiLAC Group operations with those of CWC, leveraging the combined scale in areas such as content, procurement, and product development, and capitalising on CWC’s terrestrial and submarine network assets and B2B expertise and product portfolio to benefit LiLAC Group’s operations.” (from Liberty Global’s press releasea on CWC acquisition).
You know, some guys just seem to have all the luck. As for me, I am feeling a bit traumatised trying to keep track of all this shareholder drama.