NOT ALL BLACK AND WHITE: Quietly closing the Banks Holdings deal
NOT MUCH HAD BEEN HEARD from Banks Holdings’ new owners since it won the bidding for the local brewery on December 7 and installed its new chairman and board a couple of weeks later.
But last week, we got a glimpse into the massive operation going on behind the scenes to effect the transfer of the BHL shares to their new owners.
The initial transfer of Banks Holdings shares to the successful bidder, SLU Beverages Ltd., which is a subsidiary of the Brazilian brewer AmBev, took place on Tuesday, January 12, 2016, when about one third of the total outstanding shares in BHL, almost 22 million, were registered as being traded on the floor of the Barbados Stock Exchange.
The total price paid for those shares, at $7.10 each, was almost Bds$156 million.
When added to the shares SLU Beverages owned up to the time it declared victory in the bidding battle for BHL, which was just over 50 per cent, it means that AmBev, through SLU Beverages, has now purchased close to 85 per cent of the shares. The remainder are in the process of being bought.
To recap briefly, AmBev – itself part of the world’s largest brewer, Anheuser Busch InBev – purchased SLU Beverages sometime in August last year and thus got its initial stake in BHL, 13.25 million shares, or 20.4 per cent. Then, on September 22, SLU purchased Massy Holdings’ similar sized stake, some 13.2 million shares, giving it almost 41% of BHL and triggering the takeover process.
The actual transferring process, I am told, first requires SLU’s bank, FirstCaribbean International, to ensure that all of the acceptances received are completed properly. Then these are forwarded to the Barbados Stock Exchange, where each acceptance form must be checked by the Compliance Department before the transactions on the floor of the exchange can occur. The transfer of the remaining shares pledged to SLU is expected to be completed within a couple of weeks.
So there you have it folks, after all the brinksmanship, all the back raising and, finally, the battle itself, are over, we have the Barbados Stock Exchange and the bankers for the winning side quietly adding everything up and paying out the money required to take over the shares.
If my arithmetic is more or less correct, there are still about ten million shares in the process of being transferred, for another Bds$70 million. And we expect they will all go through without noise or controversy or fanfare, cementing the view that, despite all of our challenges, we have a very safe and secure financial system, of which we can be justly proud. Kudos to the BSE.
The war for BHL shows how vulnerable Barbadian-domiciled companies listed on our stock market have been to takeover. In its annual report dated August 21, 2014, Banks Holdings’ market value is shown at Bds$191 million, based on a share price of around Bds$3.
A year later, AmBev prepared itself for the takeover campaign by purchasing SLU Beverages. At that time, it was either in, or about to enter, negotiations with Massy Holdings for its stake as well.
But the talks were kept quiet, until BHL shares suddenly went up over 60% in value on Tuesday, September 22, 2015, when the BSE announced that a “block trade transaction” in the shares of Banks Holdings had occurred at 10:15 a.m.
SLU Beverages paid Bds$4 per share for Massy Holdings’ 13.2 million shares, for a total of Bds$52.6 million. At $4 per share, the market cap of BHL suddenly shot up to $260 million.
Within a few months, as AmBev and its suddenly appearing rival ANSA McAl vied for the attention of BHL shareholders, the price offered per share continued to move up, and eventually AmBev secured a controlling interest at $7.10, giving the company, with 65 million outstanding shares, a market cap of close to half a billion dollars.
Patrick Hoyos is a journalist and publisher specialising in business. Email [email protected].