In recent months whether it has been about the concerns about illegal immigrants, the acquisition of our best companies by Trinidadian owned companies, or the debate on declining morals, Barbadians have had to endure the labels. The most recent label has come from Douglas Skeete and Colin Brewer. They both believe now that the plan to steal BS&T from Barbadians by Neal & Massy has been foiled; the emotionalism which was evident by Barbadians has been replaced with a willingness to evaluate in an unemotional way the business proposition on the table. In other words, Brewer and Skeete want us to believe that BS&T Barbadian shareholders should only be concerned with the company that can guarantee the best return on shareholder equity__and they are right according to the text books!
If Barbados were a large market, Barbadians could ignore the multiple acquisitions of choice Barbadian companies by Trinidadian companies.
To support their argument they outlined the view that BS&T should not be described as a flagship company because there are better performing companies in Barbados. The other point which both Brewer and Skeete agreed on was to observe that many BS&T shareholders have held stock for 20 and 30 years. The two statements obviously conflict. Why would BS&T shareholders hold BS&T stock in a “poorly managed” company for so long? Something does not add up.
Is there another PR stunt being pulled on Barbadians?
BU can forgive Colin Brewer and Douglas Skeete because they are both accountants and they are both trained to look at numbers. If we were the goodly gentlemen we would not be so hasty as to disregard the emotionalism of Barbadians. Barbadians have had to live with yet another label, that of being a passive people. So to witness the outpouring of emotion which Barbadians have been consistent in showing about BS&T board room immigrating to Port of Spain should be worrying. Several years after a similar sale of Barbados National Bank (BNB) Barbadians continue to voice anger at the one that got away.
We sense that Barbadians in the case of the BS&T acquisition is willing to put up a fight.
We agree with Messrs Brewer and Skeete that now that the dust has settled the scrutiny which BS&T finances will now undergo will probably result in a more accurate BS&T share value. Let us not forget that Neal & Massy had offered shareholders $5.50, the last time we checked the closing price on the Barbados Stock Exchange had reached $7.50. In fact Neal & Massy has now pushed its offer price upwards to $7.20. We note that Ansa has now increased their offer bit to $8.00 and the Brewer led consortium, playing spoiler, has pushed their offer to $8.25. In fairness to Neal and Massy they have offered the additional option for shareholders to take cash and Neal & Massy shares. The current scenario being played-out forces BU to ask if Neal & Massey expected other players to enter the ring. If they did not then our original accusation stands, they were trying to steal BS&T. If they were expecting other companies to challenge for BS&T why would they start the bidding price so low knowing full well that the climate would be hostile to the deal?
To learn what works in M&A, McKinsey interviewed executives at some of the most acquisitive US companies and compared their different approaches to acquisitions with their performance in the capital markets. We found that companies whose deals reaped long-term rewards use M&A to support strategy, not as a strategy in itself. They seek acquisitions to supplement their capabilities, but since they know how hard it is to import a business’s superior know-how, they also pursue targets that would benefit from their capabilities and expand their scale.
Trinidadian companies are swimming in cash, marry this to the political stability and calm financial markets of Barbados and T&T companies will continue to beat down our doors. Is it fair to conclude that T&T companies are executing a plan to acquire companies in Barbados because they have idle cash on their accounts? We have inserted the table above to offer food for thought. We are interested in the top two goals which USA executives listed as the keys to successful acquisitions.
In the case of the current BS&T merger BU humbly suggest that the transaction does not qualify as a strategic fit if we use the findings of the McKinsey survey. Food for thought!
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