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The door has been left open for Sagicor to accept an acquisition offer better than the US$536 million one now on the table from Canadian company Alignvest Acquisition II Corporation.
Sagicor Financial Corporation group chief operating officer Ravi Rambarran revealed this on Wednesday and the possibility of a takeover battle is covered in the Arrangement Agreement between the two entities.
On Tuesday Sagicor and Alignvest announced they reached a deal where Alignvest will acquire all of Sagicor’s shares for US $536 million (US$1.75 per share).
Officials said once regulatory approval was received, Sagicor would be listed on the Toronto Stock Exchange and delisted from the Barbados Stock Exchange, the Trinidad and Tobago Stock Exchange and the London Stock Exchange.
They added completion of this arrangement “is dependent upon certain conditions and other regulatory approvals, as well as approval by the shareholders of Alignvest and Sagicor”. If conditions are met, the transaction is expected to close during the first quarter or early in the second quarter of 2019.
But speaking in an interview with THE NATION Rambarran said: “We are supporting the transaction unless a superior offer comes to the table.”
“In the agreement it defines what that superior offer is. Neither management nor the board of directors are relinquishing in any way their duty to seriously consider an alternative offer but it has to be superior, right now this is the only offer on the table,” he stressed.
According to the 100-page Arrangement Agreement released by the two companies, Sagicor is not permitted to solicit an acquisition offer outside of the one made by Alignvest.
The Caribbean insurer also has to notify Alignvest, in writing, within two business days of any other acquisition proposal it receives including the financial terms. Alignvest has agreed to the same terms if it receives such an offer.
The Arrangement Agreement said Sagicor was free to negotiate with the any entities offering a “superior” proposal once it gave Alignvest adequate notice. The Canadian company has also negotiated the right to increase its offer in those circumstances.
Rambarran said Sagicor was opting to leave the Barbados and Trinidad stock exchanges in favour of Toronto’s “create price discovery”.
He explained: “If you look at our trading prices, and our two main stock markets, Barbados and Trinidad, over the past five [to] ten years we as the management [of Sagicor] do not believe that the prices have reflected our improving performance and do not reflect the value of the company.
“The prices have traded around US$1 per share and we are saying that’s a function of our stock markets being thin, meaning low volumes, being illiquid. So what you will see is very small volumes of shares being traded, totally unreflective of our value.
“We are saying let’s move to a stock market that is deep, that is highly liquid and will give us better price discovery.”
He said shareholders would benefit financially from the deal and said there would be “absolutely no changes” at the operational level.
“This transaction is being done at the ultimately parent level, Sagicor Financial Corporation. There is no transaction being done at the subsidiary level, . . . this is purely a shareholder based transaction,” he noted. (SC)