Berger Paints Takeover Rumours Confirmed. Scotia Investments To Go Private

Here is the latest weekly digest (Jun 12th – Jun 18th, 2017). A quick easy read of this week’s top and most relevant business news. No fluff, just the highlights.

After months of speculation, which drove significant interest in the stock, more than tripling the stock price, the news came on Friday that a controlling stake in Berger Paints Jamaica, Trinidad and a full takeover of Barbados are being executed by Trinidadian company Ansa McAl Group.

The ANSA McAL Group announced yesterday that its wholly-owned subsidiary ANSA Coatings International has signed a definitive agreement to acquire the Caribbean business of Berger, the paint manufacturer.

A statement from the local conglomerate said the agreement is to acquire Lewis Berger (Overseas Holdings) Limited (LBOH) from Berger International Private Limited (BIPL), in an all-cash transaction, for an undisclosed sum, subject to customary closing conditions, including regulatory approvals. The transaction is expected to close in the third quarter of calendar year 2017.

As stated, this is a much bigger deal than just Berger Paints Jamaica. The deal includes a full take-over in Barbados, 70% in Trinidad and 51% in Jamaica.

LBOH (the company being acquired) is a privately held UK company with equity-ownership stakes of 100 per cent, 70 per cent and 51 per cent in Berger Paints Barbados Limited, Berger Paints Trinidad Limited and Berger Paints Jamaica Limited respectively. The combined Berger Caribbean business has estimated net sales of US$35 million.

Based on a quick look at the numbers you can see that Berger Paints Jamaica is the more profitable entity (Barbados numbers unavailable), this despite Berger Trinidad being about ¾ the size of the Jamaican business. Berger Paints Jamaica also had an impressive year in 2017, while on the other hand, the Trinidadian company reported losses. See figures below (all based on the March 2017 year end results in US$m)

Jamaica Trinidad
2017 2016 2017 2016
Sales US$18.46 US$16.02 US$6.88 US$8.38
Net Profit US$2.47 US$0.95 -US$0.55 US$0.09
Assets US$11.63 US$9.13 US$7.89 US$7.17
Market Cap US$28.10 US$3.10

More to come.

Here are some of the top performers this week.

Big movers this week were JPS9.5 (+30.20%), EPLY (19.98%), JMMBGL7.25% (+14.5%), TTECH (7.61%) and DCOVE (+6.76%). Declines were lead by SEP (-14.64%), BIL (-13.57%), AMG (-11.3%), MEEG (-10.23%) and 1834 (-10.00%).

As always, you can see the full list of companies and their stock price performance since the start of the year here.

In other news…

  • The Government is looking to position Jamaica as a major player in the Caribbean gaming industry. He noted that the country is being viewed as an “important and interesting new market” in the region, and once all the regulations are in place “the industry will be of fundamental importance to our tourism product”.
  • Jamaica’s tourism reached yet another historical landmark on Thursday, June 15, when the island recorded its one-millionth visitor since the start of the year. This represents the largest number of arrivals over a six-month period. The Minister pointed out that “in tandem with this landmark achievement,” the tourism sector also earned in excess of US$1.2 billion for the same period.
  • Jamaica Broilers Group (JBG) is introducing a new bird to the market, called the Barred Rock, which the poultry producer says is likely to lead to a cut in the price of table eggs. The bird is targeted for what Jamaica Broilers describes as the ‘backyard’ segment of the layer market. “The Barred Rock backyard hen has been introduced to encourage egg consumption within the home. The company says 174 million eggs are produced annually in Jamaica valued at around $4 billion. The average retail price for eggs is $300 per dozen. Small egg farmers supply 15 per cent of the market and JBG believes they can produce more of the protein at a cheaper price.
  • West Indies Home Contractors (WIHCON) set up new headquarters at Harbour Head in East Kingston consolidating at least three bases from which the six-decade-old company operated in the capital.
  • Red Stripe is set to become the first commercial company in Jamaica to be powered by liquefied natural gas (LNG). The brewery, which is a part of the Heineken group, on Friday announced a landmark long-term deal including a turnkey supply agreement with New Fortress Energy.
  • A deal with Wal-Mart Stores, Inc could pull GraceKennedy alongside leading producers of frozen patties in the United States. Wehby, who is also a government senator, said that the agreement will give the local company access to some 240 Walmart stores in Atlanta, Florida and New Jersey.
  • Tastee opened its 51st location. Patty maker Tastee Limited opened its 51st store to the east of the island in Port Antonio, Portland, last Friday, under an agreement with a franchise partner.Chief Executive Officer Ryan Foster said the new store was “a multimillion-dollar investment.
  • Scotia Group Jamaica will spend up to $3.7 billion to purchase all outstanding shares (the ~23% that it does not own) in Scotia Investments Jamaica Limited, assuming full take-up of its offer to buy out minority owners of the company.The group wants to take the company private.
    • Scotia Investments Jamaica, which is cross-listed on the T&T stock exchange, announced that on June 8 it received a formal written proposal from its parent company, Scotia Group Jamaica Limited (“Scotia Group”) to consider taking Scotia Investments private.
  • The National Water Commission (NWC) is mulling competing in the commercial bottled water market. But the PSOJ believes this will distort the market and their focus
  • Proven Investments Limited (PIL), an offshore company owned by Jamaicans, will offer 68.9 million in new shares to existing shareholders for US$0.24 per unit, at month end. The offer to be brokered by subsidiary company Proven Wealth Limited would
  • Jetcon shareholders approved a three for one stock split at the company’s first general meeting as a listed company on Wednesday.
  • Five years ago, Wisynco Group was sending only one container of Bigga soft drinks a month to foreign markets. But since then, its partnership with American company Golden Krust Caribbean Bakery & Grill has grown exports sales 300 per cent and it ships up to four containers of the beverage per month under the supply agreement. The rise in demand is credited to the twinning of the drink with items on the Golden Krust menu.
  • With its $14 billion purchase of grocery chain Whole Foods Market Inc, the largest e-commerce company (Amazon) announced its intention to take on Wal-Mart in the brick-and-mortar world. The lines that divided traditional retail from e-commerce are disappearing and sector dominance will no longer be bound by e-commerce or brick-and-mortar, but by who is better at both.

Here are some key market and economic figures

  • Stock Market Movement (Combined Index):
    • Week to date: -1.62% | -1.42% Last week
    • Month to date:  -2.53% Jun | 3.33% May | 4.08% Apr | -3.09% Mar | 9.26% Feb | 10.09% Jan
    • Year to date: 21.75% (27.6% YTD 2016)
  • Inflation:
    • Year to date (Dec 16 – May 17) 1.4%
  • Unemployment: 12.7% – Jan 2017 (12.9% as at Oct 2016)
  • GDP: 1.1% Oct – Dec 2016  (2.0% – Jul – Sep 2016) – Rate of Growth of Value Added at Constant (2007) Prices Seasonally Unadjusted

Thanks for reading our weekly digest. (Jun 12th – Jun 18th, 2017). All weekly reviews can be viewed here.

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