Are Companies Listed On the Barbados Stock Exchange Seriously Undervalued and Vulnerable To Cheap takeovers?
Submitted by Dr. Justin Robinson
Dr. Justin Robinson
On Tuesday September 22 2015, approximately 20% of the shares in Banks Holdings Limited (BHL) were acquired by SLU Beverages Limited (‘SLU’), a St. Lucian company. When combined with BHL shares […]already held by SLU,
the above-mentioned transaction resulted in SLU owning approximately 40% of the shares in BHL. SLU is majority owned by Companhia de Bebidas Das Américas – AmBev (‘AmBev’), which is controlled by Anheuser-Busch InBev. AmBev is the largest brewery in Latin America and the fifth largest in the world. Ambev operates in 14 countries in the Americas and its portfolio includes beers like Antarctica, Brahma, Bohemia, Skol, Stella Artois and soft drinks like Guaraná. As the largest PepsiCo bottler outside United States, it sells and distributes PepsiCo products in Brazil and other Latin American countries.
On September 22 2015, Ambev purchased 13,170,728 BHL shares traded at $4 per share, paying approximately BDS$52,682,912.00. On that date, BHL’s share price on the stock exchange was BDS$2.49 per share. AmBev therefore paid a substantial premium of about 60% over and above the most recent stock market price on the Barbados Stock Market. However, BHL’s Balance Sheet for the nine months ended May 31 2015, valued the shares at BDS $4.81 each. The Balance Sheet reports shareholders’ equity of BDS $311,812,000, and with approximately 64,853,760 shares outstanding, the book value per share was approximately BDS $4.81. Therefore, on September 22 2015, BHL’s balance sheet valued the shares at BDS $4.81 each, the Barbados stock market valued the shares at BDS$2.49 each, while AmBev was willing to pay BDS $4.00 per share. Is AmBev really paying a premium or getting a steal of a deal? They are paying sixty percent more than the stock market valuation, but paying a 20% discount on the book value of the company.
The balance sheet value of the shares or what is termed the book value per share, is typically viewed as a backward looking measure based on the book value of the companies’ assets and liabilities. It does not account for the market value of assets and liabilities or future earnings potential. The stock market valuation is supposed to do that, and reflect the book value plus future growth potential. When you sell a company you not only sell the company as is but you also sell the future growth potential, and investors normally expect to be compensated for such, and buyers typically pay a premium.
On the surface the stock market price of BDS$2.49 compared to a book value of BDS $4.81 suggests that investors on the Barbados Stock Exchange view the future growth potential of BHL as being negative. Companies’ shares being sold at prices below their book values is extremely rare on most stock markets and is typically associated with companies in financial distress and facing bleak futures. I doubt investors see a bleak future for BHL and negative growth potential. I think the low market value is due to the infrequent level of trading on the Barbados Stock Exchange. Stock prices only change when trades of a certain volume are made. The infrequent trading means that stock prices are not being regularly updated to reflect the current book value and future growth potential of companies. Stock market prices only come close to reflecting the true value of companies if there is sufficient trading by informed investors. I am sure we have lots of informed investors in Barbados and the Caribbean, what we appear to lack is sufficient trading, or a group of what economists call “marginal investors”. Marginal investors are investors who are willing to buy and sell shares regularly at prices based on their estimates of the future direction of a stock price. Marginal investors are typically institutional investors such as mutual funds, insurance companies and other professional investors.
Why with so many informed and sophisticated institutional investors is there such infrequent trading on the Barbados Stock Exchange? Is this lack of marginal investors leaving companies on the Barbados Stock Exchange seriously undervalued? If this is so, investors are unable to reap the full benefits of their investment and companies are vulnerable to cheap takeovers. Why should I buy shares when market prices only approach realistic levels when there is a takeover bid? Why should local companies be sold at relatively low prices because of consistent undervaluation on the local stock exchange? Oh for some marginal investors! There are many more companies on the Barbados Stock Exchange trading at below book value.
Barbados Underground 
“He said community storage tanks would be placed in appropriate areas, while the BWA was immediately obtaining four additional water tankers to help augment the supply”
http://www.nationnews.com/nationnews/news/73031/water-ease#sthash.IVS45Uic.dpuf
I hope they realise that this is a short term “emergency” solution that worked well when the majority had pit toilets and only required water for cooking and bathing.
The time for residents collecting rain water is now.
Bad manners interrupting de rich boys diatribe but…….
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@Artax
Do you believe all this huff and puff?
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@ Money B
No other human has ever suggested that Buying Low and Selling High is poor approach to Profits!
+++++++++++++++++++++++++++++++
…Bushie did not really expect you to take his good advice to butt out … 😉 LOL
Boss man …where are they going to ‘sell high…’?
You playing that you can’t read??!!
Bushie talking about buying low (with great difficulty after paying broker fees etc) …and then having to sell low …because Directors manipulate the system to keep share values artificially low …. while they cream off the retained earnings for themselves…
Which part of that do you not get? why do you think that all these companies were UNDER-valued?
Since you were located on the other side of the fence you may need to put yourself in the shoes of some of you touted black friends to fully get it….
On YOUR side of the fence you could buy low and then decide when YOU wanted to sell high (like your dad did) …. when you got tired milking the retained earnings and found a Trini with more petro dollars than sense…
The point is that MARKET FORCES were not allowed to drive dividends and share values, so those not able to manipulate company accounts (blacks) went with bank savings instead of throwing good money after bad…
Why do you think that blacks who left Barbados become such willing investors…? like Hants and Dee Word….
Why don’t you join Bushie in calling for FULL TRANSPARENCY in all publicly traded companies in Barbados ….and see how fast many cease trading publicly….
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@ David
LOL
yuh gotta be careful with Artax on this one…
He knows all the tricks of the trade when it comes to manipulating the accounts to deflate dividends and taxes. In fact, the Money Brains of Bim would have been UNABLE to achieve their ends for so long without the expertise of those of his ilk…
ah lie Artie…??!!
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Sometimes when I read Bush Tea’s comments I don’ know whether to laugh or cry.
@ MoneyBarain, you extolled the simple fact that Mr Bushie has this great tendency to mix Madoff charlatan level finance advice with astute and pellucid historical/societal financial analysis. You said: “You have now created history by suggesting that Black peeps were disadvantaged by LOW Stock prices!!” I concur.
Bush Tea’s remarks were the most counter-intuitive, implausible remarks in a (REAL FINANCIAL BUSINESS WORLD) I have seen since come of Sinckler’s budget comments (smile).
How on God’s green earth does “…keeping stock prices RIDICULOUSLY low…” STOP SMART Blacks with long term investment plans from buying these stocks?
@ Mr Artax thanks also that you can restate that differently – as has been repeated here in this company blog repeatedly – with ” … what would have prevented Barbadian businesses, or ordinary Barbadians from approaching Massey Holdings and purchasing their 20% (as did AMBEV)”
“We have only ourselves to blame if foreign companies take advantage of our stock market to purchase shares or takeover companies.”
As I said earlier it seems clear that BHL wanted to expand when they partnered with SLU. If as these latest remarks from the AmBE VP suggests that the SLU shares were bought only recently then the serious question has to be asked as to why that happened?
This is where Bushie’s astute remarks get my attention because it seems to me that BHL were back-raised. So was that incompetence re coordinating that original partnership or deliberate misadventure. Remember in 2010 the brouhaha was about SLU being able to determine when and how any other shares could be sold.
How does that work only one way. BHL back-raised then????
I need to research whether Am-Bev were ALREADY associated with SLU in some way!
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@Dee Word
It is accepted a few manipulate the BSE to their benefit. Blacks in Barbados and Black companies do not command concentrated resources to be effective in the financial market. The few mentioned do, money and influence on the system.
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BTW @ Bushie there was an excellent piece on Bloomberg just recently that spoke directly to your excellent treatise above re the latest generation squandering the wealth of the earlier hard-working (in this case the stealing white plantocrary/business owners) generation.
It touched on exactly what you suggested that the carefree playboy/girl attitude is often the ‘raison d’etre of the 3rd generation and they lead the fam to poverty!
Not sure we will see a lot of poor Banks or Wiliams Industries white families in Barbados but your point is apropos still!
I am at one with you on most of that historical commentary but your financial analysis beyond that is often absolutely difficult to rationalize…considering the size and nature of our financial markets.
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@David, that is correct. What I really hope that the smart BU readers can glean from all this beer froth that we have generated here is that it is action stations.
I do hope that astute readers link the Claire Cowans directly and practically with the SLU, Massy and AmBev’s of the world. And what do I mean: Barbados is undercapitalized with significant undervaluation in our stock market and thus is ideal for business poaching; particularly in this time of major world-wide consolidations!!!
Forget the corruption part of it and get inside the business.
Unless we step up forcibly and take control of our long standing local companies and our operational governance the companies will be poached by internationals or bigger regionals and the big business deals will be boondoggles for graft by outsiders.
Of course we always knew that but action is now…
Thankfully we have Goddads’ expanding all across the region. we have Simpson motors smartly taking up the oil infrastruture of the old multnationals, we still have COW and Wiliams Industries. Locally we have smart fellows like Bynoe and Hall doing their food operations and there are quite a few other very smart fellows under the radar who are doing some awesome stuff business-wise.
So all is not lost.
But the Credit Union money and other funds must be deployed with better acumen and foresight otherwise we will go through this pain again.
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@ De Word
The following is an excerpt from an article entitled: “Zacks Lowers Ambev SA to Sell (ABEV),” which was posted on the Mideast Times on October 5, 2015, by Pezhman Azimi.
Zacks cut shares of Ambev SA (NYSE:ABEV) from a hold rating to a sell rating in a research note issued to investors on Tuesday morning, MarketBeat reports.
According to Zacks, “Companhia de Bebidas das Americas (AmBev), based in S?o Paulo, is engaged in producing, distributing and selling beer, carbonated soft drinks and other non-alcoholic and non-carbonated products in many countries across the Americas. It maintains an agreement with PepsiCo International, Inc. to bottle, sell and distribute Pepsi products in Brazil and in other Latin American countries, including Lipton Ice Tea, Gatorade, H2OH!, Propel and Frutzzz. AmBev conducts its operations through three business units: Latin America North, Latin America South and Canada. Latin America North includes its operations in Brazil, where it operates two divisions: beer sales and carbonated soft drinks and non-alcoholic non-carbonated sales; and its operations in its Hispanic Latin America Operations, excluding Latin America South, operations. Latin America South includes its Quinsa operations in the countries of Argentina, Bolivia, Paraguay, Uruguay and Chile. Canada, represented by Labatt, includes domestic sales in Canada. “
ABEV has been the subject of a number of other reports. JP Morgan Chase & Co. decreased their target price on Ambev SA from $6.30 to $4.90 and set an overweight rating for the company in a research report on Thursday, September 17th. The Street lowered Ambev SA from a buy rating to a hold rating in a report on Thursday, June 4th. Finally, Barclays reissued an equal weight rating on shares of Ambev SA in a research note on Thursday, July 16th. One research analyst has rated the stock with a sell rating, three have assigned a hold rating and four have assigned a buy rating to the company. Ambev SA has an average rating of Hold and an average target price of $6.20.
Ambev SA (NYSE:ABEV) last issued its quarterly earnings results on Thursday, August 6th. The company reported $0.06 EPS for the quarter, beating the Zacks’ consensus estimate of $0.05 by $0.01. Analysts anticipate that Ambev SA will post $0.26 EPS for the current year.
The firm also recently disclosed a dividend, which was paid on Monday, September 28th. Investors of record on Friday, September 11th were paid a dividend of $0.041 per share. The ex-dividend date of this dividend was Wednesday, September 9th.
Ambev SA, known as Inbev Participacoes Societarias SA, is a Brazil-based company engaged in the brewers sector. Ambev produces, distributes and sell beer, carbonated soft drinks (NYSE:ABEV) and other non-alcoholic and non-carbonated products across the Americas. The Company conducts its operations through three business units: Latin America North includes its operations in Brazil, where Ambev operates two divisions: beer sales (Beer Brazil) and carbonated soft drinks and non-alcoholic non-carbonated sales (CSD & NANC Brazil), and its Hispanic Latin America Operations, Excluding Latin America South (HILA-Ex), which includes its operations in the Dominican Republic, Venezuela, Ecuador, Guatemala (which also serves El Salvador and Nicaragua) and Peru; Latin America South includes its operations in Argentina, Bolivia, Paraguay, Uruguay and Chile, and Canada, among others.
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@ Dee Ingrunt word
Do you appreciate that there are some things that you just DO NOT understand?
It is hard even for the wise and prudent to sit in a North American environment, with north american norms, and to understand the apartheid based economic challenges faced by black Bajans…
shiite man…. even ‘educated ‘Black Bajans living in Barbados who are scrunting as a result, do not get it…. far less an ingrunt half-Canadian word…. 🙂
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@Bush Tea I am happy for you that you devolve serious discourse to your pithy, racially tinged ad hominems as a practical way to explore key matters facing Barbados. I suspect its that mentality that you employed when you sat in your Credit Union meetings and your colleagues whiffed at doing some serious business deals. No problem my friend…we can talk shiiite here when real issues are afoot.
And on that vein I came across a few wonderful remarks from back in 20011 (from a Belizean news source) and also another 2012 BSJ article which goes to your argument that the old-boy Board network at BHL were either a bit asleep or intentionally mal-intended.
(I understand the context of your ” apartheid based economic challenges” of Bajans. But when you start to accept that we who are now in this last generation are FULLY responsible for our actions [like your CU whiffs] then we can locate your comments into proper perspective. Until then it’s annoying noise that serves no purpose than your desire to rant!)
From :http://7newsbelize.com/sstory.php?nid=18806
“And before we close tonight, some news from Barbados which could affect things at the Citrus Company in Belize. “Barbados Today” reports that Banks Holdings which owns 47% of the Citrus Products Of Belize Limited could be at risk for a takeover.
Seems the company has taken the decision to issue shares to finance a new brewery – and that has put its fate somewhat in the hands of Latin Capital Fund and SLU Beverages Limited.
… The interpretation being taken by skeptics is that the moves make Banks vulnerable to a TAKEOVER (my emphasis, and this 4 years ago). No telling yet how that would affect Citrus Products of Belize if it were to happen – but right now it’s just a possible scenario.
Banks has been consistently at odds with the majority shareholder the Citrus Growers Association. ”
2—
The BSJ article was an interview with Sir Allan and frankly it readily validates some of what you have been saying (the indifferent behaviour of the white power players) and too a point I made earlier re in my view absolutely being back-raised.
Sir Allan said: “…going to the shareholders never crossed our radar screens. That’s the truth. If it had, and people thought that, you know, changing paradigm, different world, we should go, we would have gone. We had nothing to shy away from.”
And, ‘He said businesses today were being more scrutinised by shareholders, and he thought it was a healthy development. But the BHL board’s decisions that led to the appearance of a new large shareholder on its register were based on the way things were done over the years.’
Hoyos noted that ‘The plant will also be able to produce beer not only glass bottles, but also aluminum cans and PET bottles, and in order to benefit from the increased capabilities of the new plant, the company was looking to other beer makers abroad with a view to doing “co-packing” for them in the Caribbean, to save them the cost of shipping finished product in to the region.’
How do you go from expanding and planning to ‘co-pack’ — which must mean brewing others’ beer under license and selling in 6 or 12 packs along with your and the other brands— to BEING acquired!
Anyhow here it is the full text for those interested:
http://www.broadstreetjournalbarbados.com/the-bottom-line/2011-04-01/sir-allan-bhl-acted-within-its-legal-and-historical-conventions
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@ Artax, and your point of that lovely set of data??
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Bushie wrote,
Why don’t you join Bushie in calling for FULL TRANSPARENCY in all publicly traded companies in Barbados ….and see how fast many cease trading publicly….
I concur and agree fully!
I dont own any shares in Bim and have never been a member of any Cattlewash or other Clubs (Masons, Lions etc). I always consider LIQUIDITY before investing and when I expect the excrement to intersect with the oscillating device, I SELL. Why would I invest in Bim with outdated Accounting Info, poor liquidity, when the Globe is my Oyster?
Bushie you have a tendency to allude to massive Conspiracies when indeed the major problem is small size and illiquidity.
Bushie wrote, Why do you think that blacks who left Barbados become such willing investors…? like Hants and Dee Word….?
Simple, they making more $$$$$ with lower costs in Canada/ US et al just like myself and realise that being Black has no bearing on making Profits in Stocks, RE, Business etc as the investments dont give a shyte bout their skin colour! The bottomline is that many black peeps in Bim are Millionaires that are even more clever about keeping that secret, think Shopkeepers, Rum Shop Owners etc. Most people in Bim, Canada, UK , US will always be poor because they Fail to Plan for Success and therefore are actually Planning to Fail!
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Word wrote,
It touched on exactly what you suggested that the carefree playboy/girl attitude is often the ‘raison d’etre of the 3rd generation and they lead the fam to poverty!
There is a very old saying,”the first generation, scrimps saves and invests, the second generation enhances the wealth and the third generation blows the blendser!” This is not a Whitey condition but is a human frailty. Why? The parents are too busy making the $$$$ and forget to discipline the youngsters as compensation for not having enough time to spend with them. My kids were never given everything the wanted, I could have given them a good car at 16/17 years old but instead I gave them the 8 cars of the TTC Subway! DISCIPLINE! Work for what you want, show me that you deserve to inherit or I will fund the SPCA as those animals are innocent!
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…no point in arguing with you Money B…
as Bushie said…
You are not ‘normal’
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Bushie,
Thanks for the complement that I am not normal, I have always strived to be “not normal
because normal people are usually poor! lol
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LOL @ Money B
likewise 🙂
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Oh no, Money B I never for one moment suggested that the squandermania concept of the 3rd generation was confined, restricted or otherwise associated only to whites.
The Bushman spoke to the issue of the white ‘players’ so I segued to the article from there. But it’s a human condition. In fact Bushie’s description for it is of course Brass Bowlery.
Whether we want to accept it or not we Black Bajans badly squander the wealth our forefathers have worked hard to give and invest on our behalf by simply working hand in glove with your kith and kin to allow these same takeovers.
They fought hard to give us good educations. We squander that by electing our crooked brothers and sisters to lead us. And den everyday cussing your kith and kin as the culprits!
Our great grands and grands toiled and saved to build the little shedroof houses and get that acre of so of tenantry land. But we does squander that ‘wealth’ and sell off de land and build nice big house as soon as we put the old man or old woman in a senor citizen home or God forbid the alms house.
The Bushman is quite right on many fronts …he just doesn’t realize that your problems and the ‘black oppression’ perpetuated on the white side are still dwarfed on the black side by our ridiculous behaviour which facilitates a lot of that.
Absolutely not a popular thing to say, but the basic facts are there.
Certainly no one stopped us (any group of smart Bajans) from creating and developing ‘Griot Investment Group’ in which we would have invited big investment funds to buy and invest in our key business and industries.
What was Latin Capital Group other than a team of investors which pulled in $$ to invest!
We just didn’t. And now we are paying the price and casting the net of blame far and wide!
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@Dee Word
How can you divorce behaviour perpetrated by Whites on Blacks as not disproportionately contributing to the state of play? Do you think as groups differentiated by education, race, status/class there is no social combustion?
Again you trivialize a very complex issue.
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Ingrunt,
I did not intend to suggest that you did say it was a white condition.
Your points certainly have merit. We all must be realistic in identifying the real problems before us, otherwise the solutions wont work. Success has no racial quality it can be attained by those who are determined to succeed and turn over every rock to find solutions. It is pointless to spend too much time focused on the rear view mirror. Reality is that many poor people have succeeded because of relentless determination and being Black does not change that process.
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@ David
Dee Word just like to argue…
We are talking about the SPECIFIC PROBLEM of local businesses being undervalued and thus open to takeover by external vultures.
All Bushie did was to point to the ROOT source of THAT problem… and that has little to do with black brass bowlery… not enough of that in boardrooms bout here…
Has Bushie EVER hesitated to cuss, fret, fume and rile about the lotta shiite that black bajans do? ….HUH?
Is Bushie even BLAMING the whites for their tactical and strategic manipulation of the stock market? ….NO!!
…just EXPLAINING the real problem.
Wunna can’t see that Bushie admires Money B…?
steupssss..
Dee word just want noticing… 🙂
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de Ingrunt Word October 6, 2015 at 7:21 AM # @Atrue, I have read your posts on this subject with keen interest and welcome your insights and perception. However, I am unclear how your comment “Let us hope that the larger shareholders, such as Sagicor, reject this offer… their $4 offer is a clear sign that the $4 is below the real value…” is meaningful.//Even if the last group of big shareholders do not sell to allow SLU controlling interest how does that prevent SLU from implementing their will at BHL with such a majority stake? It will not!
Yes, usually, but if the larger shareholders publicly reject the offer, the smaller shareholders will probably do likewise. The larger shareholders have the resources to keep SLU in check if they so desire. After all, the larger shareholders have their own shareholders to represent and should seek the best deal.
However, most of all, if nothing else, we just want the BHL directors to show some strength and fight on behalf of the current BHL shareholders. Looking forward to the share valuation…
SLU: six, you are in the mix – five, you are still alive – four, see the door
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David, first of all let’s do some housekeeping because I laugh hilariously whenever you say that I ‘trivialize’ a debate. Say a lot of things about me but if the definition is “to make (something) seem less important, significant, or complex than it really is” then you gotta be joking.
Despite clearly explaining that there is clear ‘black oppression’ and accepting the Bush Man’s argument that white Bajans have benefited from decades of the explanation of blacks you have deemed that I have trivialized the debate by attributing a key part of of Black Bajans’s plight to their own destructive forces.
Mr. Blogmaster I can only but bow to that type of ‘unbiased’ analysis.
Let’s agree that it’s a complex issue and that you are absolutely biased in your assessment of responding to a view that does not place all blame at the doorstep of the white race.
I’ll pull together some school stats and drop them in another post to illustrate how strange your position is…how’s that!
I hope you can be at least balanced in your views.
As Money B say above “we all must be realistic in identifying the real problems before us… It is pointless to spend too much time focused on the rear view”
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Above, explanation = exploitation. Like Dompey I have to blame spell-check and a less than careful review for that.
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@Dee Word
Please reread the comment:
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So Atrue if I am hearing you correctly you are not worried about the actual take over itself but rather the price being offered.You want $6/share.
Ok that’s business at its best.
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De Ingrunt Word October 6, 2015 at 1:00 PM #
“@ Artax, and your point of that lovely set of data??”
Putting your sarcasm aside, I thought you would have concluded that things do not seem very legitimate with AmBev or they have been manipulating the stock exchange.
I’m sure if you were to read additional information on AmBev, you will realize it seems as though they are seeking to take over the beer industry in South America and the Caribbean.
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@Artax, LOL.. You are definitely an accountant type. I have said here before lighten up!
I was absolutely not being sarcastic. I read the entire piece and wondered what was the take away.
Here are comments I made on Oct. 3rd here re your point that “I’m sure if you were to read additional information on AmBev… ” .
I said then:
“…What I do know as a fact however is that the gargantuan Anheuser-Busch InBev beer group sells mucho beer brands worldwide through its various companies. And
I know that they were well along the path of acquiring some other major world beer brand back in [2010] …The larger proposed InBev/SABMiller merger provides a giant foot print in the Americas (north and south), Canada, UK, Europe, South Africa and greater Africa, Australia and Asia and of course right here in our little Caribbean region…With consolidation generally comes cost rationalization. Corporate speak for job lost….”
So that’s why I did not understand ‘the lovely set of data’. I was going to say to you that the fancy commentary from those analysts is for the institutional investor and not little fellows like me.
Remember Artax you are the resident financial and accounting guru here so I would be very rude (and that I try never to be) to offer sarcastic remarks on anything you post in those areas.
Other areas maybe but not those. (lol)!!!
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An example for the BHL directors and shareholders – A 3rd Bid
“…AB InBev is clearly pulling out all the stops — two other initial proposals at £40 ($61.07) and £38 ($58) per share were rejected by SABMiller, according to the filing…”
http://money.cnn.com/2015/10/07/news/anheuser-busch-inbev-sabmiller-beer-merger/index.html?iid=hp-toplead-intl
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The beer industry is a hive of activity elsewhere-
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This is currently being discussed on VOB.
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Interesting to listen to Sir Allan Fields calling out Goddards, Kyffin Simpson et al to bid for the 60%.
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David Ellis, good 6:30 program on the bid for BHL, except that you could have further looked at the issues of BHL’s true value, as opposed to the trading price, and potential counter bids.
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@Atrue Freeman
How relevant would looking at the true value have been if there are no valuation reports to reference?
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David, to get the message to the shareholders that the $4 may not be as good an offer as some are promoting it to be…
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@David, Sir Allan’s remarks are simply self serving as you realize. He is really saying I really couldn’t care less who buys this damn company or whether it stays in Bajan hands or not.
If the BS&T Board were keen on stalling a hostile take over they would have placed as many ‘poison pills’ as possible in place or fundamentally established key partnerships with big players who could help prevent a take over.
They were particularly lax and took their eyes off the ball re BHL.
It would have been clear to any financial student at Community College far less astute experienced, financial experts like those guys and also to people like Dr Alleyne that an investment group does not take big positions in major concerns (as Latin Capital did with SLU to Banks) unless they have an exit strategy to off-load those shares at profit and move on or themselves plan to maneuver to possibly take over.
These actions were orchestrated five years ago. Pat Hoyos wrote an article then which seemingly caused no concerns whatever at the time.
Oh what a conniption!
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Understood but unless we get higher bids a 60% premium on existing will be hard to ignore.
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Shareholders should also be aware that holding on to their shares in the absence of a better offer is an attractive option, as I cannot see SLU et al investing around $100 million in BHL and being comfortable without gaining control.
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Interesting remark David re ‘valuation reports’.
The most compelling valuation report is the annual financial report. That contains all (unless its a Cahill company) the real data that an analyst can use to make practical and pertinent valuations. Coupled of course with industry data, market projections/analysis.
But a VOB in-depth report could surely have used the same Dr Marshall to do a deep dive analysis. That would have been the type of investigative stuff you speak of regularly.
Actually considering all the regional mergers recently I am surprised that VOB does not have someone on retainer to do their heavy analytical lifting on business stories like this.
BTW Red Stripe is going big time as well with the other market moves that this InBev/SABMiller ting has generated.
Note that the financial press were projecting such actions going back several months but naively, I just never expected it to include Banks and Barbados.
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@Dee Word
It goes back to something Dr.Don who showed guts to post on BU a couple times in the early days, we need to manage our companies better to make it possible that BHL share price should be $10 today.
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David, it may very well be worth $10 to SLU et al to facilitate their expansion. Shareholders just need to show some resolve.
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@Atrue Freeman
The resolve from shareholders you yearn for is derived from a culture that has financial intelligence as a characteristic. Dr. Robinson use to generate Stock Exchange analysis a couple years ago and generated little response. This ignorance is reflective how shareholders are routinely taken advantage of in the market.
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David, I agree completely that we need to manage better. But I offer to you that even at $10/share Banks would still be an attractive sud to suck.
They just built a new plant that is running at less than capacity, they have a good brand of beer and too an interesting set of beverage products (PHD). With a broader based distribution network and reach into other Latin markets there is still more value to be gained.
Look at it this way AB InBev offered I believe it was $100B to SABMiller. They rejected as too low although it was at a significant premium over their current stock-based value. The offer was still increased. That too rejected
Obviously I am not comparing Banks to SABMiller BUT the context is the same.
If AB-InBev are successful be assured there will be major cost cutting, operational changes to improve cost inefficiencies, job cuts and surely some operations will be sold. In sum immediately the work starts to claw back some of the money paid.
The same strategy would happen here. So $4 or $10 if these fellows see the untapped value, as it seems they do, then they will find the funds to buy.
And of course remember they only need 51% to take control…
Anyhow I hope Atrue gets his $6 price point so that he can sell and run happily to the bank.
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Douglas Skeete of the Barbados Association of Corporate Shareholders, we hope that your members are prepared to wait this out.
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I listened intently to what the Executive from Inbev was saying and it sounded good ie increase sales of Banks in Bim, but use the massive spare capacity of 43.4% to produce Presidente brand of Dominion Republic for regional export. This suggests that not only would current jobs be safe but many jobs should be created if production is to increase by upto 76%.
The BIG problem is that this organisation in the US has decreased product quality, used cheaper quality hops and other components including thinner glass and cartons for 6 packs.The Corp then suddenly increased prices significantly. Indeed, sales of certain AB brands are down considerably.
Seems that the Govt has to make it clear that nonsense will not be tolerated. Govt should consider engineering a competing group to bid for the shares. Maybe a combination of Sagicor, Goddards et al and Govt investment from NIS or other pools of $$$?
If these Inbev people mess up Banks taste, quality etc by reducing costs then who would benefit but Carib, Red Stripe and Heiniken. Heiniken has made a deal with Diageo and is increasing its commitment to the region so may also be interested.
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@MB, I didn’t know that you were socialist in outlook cause it seems the remark “Govt should consider engineering a competing group to bid for the shares” is down that alley. LOL.
But why Gov’t needs to be involved in such a move! Don’t fault your logic just the partner grouping.
Of course any other bid than another sizeable beer company will not realize the expansion in the DR market and other ‘interesting’ things mentioned by the VP. And moreover as you highlighted per their parent company’s track record his lovely commentary is not to be accepted on face value.
Interesting times ahead.
And with all this turbulent activity in the market one needs to look very carefully at Goddards. Are they insulated from take-over!
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@David, I believe you touched on this (excerpt below) previously. But I highlight again here to further highlight that as we have this conniption re Banks being pulled from under our feet our cousins up north in Jamaica are already ‘h’out de yard’…
“Heineken NV, the world’s second-biggest brewer by sales, took control of two joint ventures from partner Diageo Plc, spending $781 million to shore up control of brands including Jamaica’s Red Stripe beer amid a consolidation sweep in the industry.
The Amsterdam-based brewer said it bought a 57.9 percent stake in Jamaica’s Desnoes & Geddes, bringing its holding to 73.3 percent. Heineken will later make an offer for all remaining shares….”
Nutting our economies can really do when the big boys ‘make us an offer we can’t (or don’t want to) refuse’!
So D&G gone too.
Looks like these international business folks paying good money to control everything in the region; well not everything but at least beer and politicians!!!
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Years ago, when this “peculiar financing deal” was orchestrated to construct the new brewery (peculiar as the financing firm was a competitor, and the size of the deal clearly opened the door for a later takeover bid), who was the largest BHL shareholder? Massey? And is it not the same Massey who sold its shares to SLU? They knew their exit strategy years ago. Is $4 a fair price? Who knows, maybe Massey needs the cash.
The BHL Board is buying time to ‘look for’ a competitive bid.
My guess is SLU will dump the Dairy as soon as it can, their juice type products aside, the products/manufacture/distribution etc don’t mix well with InBev. They want beer/alcohol products and distribution.
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NP
I was thinking that the said BHL chairman King was the CEO of BS&T when it was sold to Massey.In both sell outs this guy King is playing a major role.Something is rotten in Denmark.He should be appearing before a committee of parliament to be publicly grilled on his role in selling the patrimony of Barbados.The few opportunities bajans had to invest in bajan companies have been prostituted on the altar of private back room deals.
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@Gabriel
What prevented Barbadian companies from bidding?
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Still involved with both BHL and Massy
http://www.thebhlgroup.com/page.cfm?p=leadership
http://www.massygroup.com/About_Us/Board_Members/GAnthonyKing.aspx
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@Gabriel. Ever heard of closing the stable door after the horse has gone?
Any Bajan or Bajan corporation can BID to buy shares via the BSE.
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Lessons for BHL directors and shareholders – 3rd proposal may not be enough
Brewing Giants Joust Over Tie-Up
SABMiller says AB InBev’s $104 billion proposal ‘very substantially undervalues’ the company
http://www.wsj.com/articles/ab-inbev-makes-revised-proposal-to-buy-sabmiller-1444199046
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All these big Businesses including “Professional” Services firms talk a great game until it makes sense, from their limited pov, to break all the Strategic directions and “long” term thinking. My son was promoted in record time and trained with one such firm that wanted to grow here in TO—–until the 2008 situation hit and all Strategic “thinking” vanished and over a hundred youngsters were let go regardless of capability/ promising future. Dump salaries so the Partners bonuses/ pay is not effected!
The solution in Bim is to develop DRIPs ie Dividend Reinvestment to accumulate shares at very low costs. We could innovate other methods to increase share ownership widely at very low cost.If another Group of major investor Corps are interested but are looking for $20-40 mn surely financing could be arranged by some means. Interestingly I did an analysis of several BSE stocks, back in 1978 on behalf of my father and Banks was the only one worthy of investment.
While I tend to believe in free enterprise the reality in a small market is that there is only one Brewery and if these Inbev people are likely to mess with the Brand quality etc then it requires some form of protection. Inbev has conducted themselves somewhat crazily with AB in a very competitive massive market like the USA, so we must assume they will run roughshod over lil Bim! But surely a couple $$$$$$$ to Pols will pave the way to mayhem? The question is what will be the price?
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David
“What prevented Barbadian companies from bidding?”
++++++++++++++++++++++++++++++++++++
When the ‘inside’ players on the Board (with full access to all information), are not playing on a level playing field…. it would be a VERY rich, or very foolish investor that will try to outmanoeuvre them…
There is method to the madness.
1- Acquire enough equity to get on to the Board with full access to information.
2 – Influence policy and appointments etc to grease the way for your long term strategy
…the rest is just PR
Meanwhile, most of these other ‘Barbadian Companies’ of which you speak are busy playing their own shenanigans…
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Shiite man!!! Money Brain….
Why could you not have taken over your father’s business here and stayed around?
…you actually got sense….
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Bushie, full access to information.??????????????????
Bushie the info does be real outdated and in some cases which set of books are you going to be privy to ?
Bushie, I correctly did not want to become a Victim of political corruption and stupidity! All the Bajan Statesmen done dead already!( Dippa ainy Skippa, Cammie gone, Grantley and Tom playing Poker somewhere———)
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@ Money B
That situation (outdated information /cooked books) applies to outsiders and to Board lackies, but the INSIDE players are the ones who engineer the cooking and who have the access…. and who decide WHICH set of books to hand over to whom…
LOL
did you compare CAHILL statements of accounts for the bank …with that for the taxman?
…same shiite bout here….
So when it comes time for wage negotiations, declaration of dividends, payment of taxes ..one set of accounts come out showing the perilous condition of the ‘poor’ company…
When they are seeking financing or looking to impress investors, a whole different picture emerges…
Looking on from OUTSIDE the typical brass bowl decides to put his savings in the bank…cause um don’t make no sense just handing it to these crooks.
“…..Victim of political corruption and stupidity! ”
++++++++++++++++++++++++++++++++++++++++
You are talking shiite Money B…
What victim what???!!
NOBODY bout here could victimise you…. NONE.
Skippa this is Barbados, and you possess the three most critical attributes for success..
Yuh got sense
Yuh got money
….and yuh white
Added to that yuh seem to be honest and straightforward….
LOL
….only difference between you and Bushie’s top-man “Lowdown Hoad” is that he ain’t got no real money 🙂
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@Bush Tea
Yours is the response we wanted to extract. Changing the mindset to invest in shares is more than the offer and price.
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“With Republic now controlling about 25 per cent of corporate business in Barbados and 27 per cent in retail banking, De Souza said the aim was to continuing growing this share in 2016.
http://www.nationnews.com/nationnews/news/72984/banker-brighter-days-ahead#sthash.2OHJaEHY.dpuf
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So King was a Massy man.Strategically placed like the proverbial fox in the BS&T henhouse,did the henchman thing and moved ownership and control to Trinidad with the connivance of the former jehovah witness owned tropical battery man Rallan Fields.Since King is notorious for wrecking local ownership of bajan companies,he wheels and deals in the customary fashion,borrows with the intention to repay with ownership on a platter at a future date,determines that now is a good time,seeing that the poor rakey government is strapped for foreign exchange,gets the buy in of the MoF,and makes his move.Pretends to buy time with a late notice to shareholders,have AmBev say a few words on DLPTV and the deal is consummated.The idea of fiduciary trust and business confidence do not exist in these boardrooms where tired old worn out bajan whites have the final say.
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@ gabriel
EXACTLY !!
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The Golden Rule?
He who owns the Gold makes the Rules!
How much “Gold” do U own?
How much current Consumption, over many years, have U forgone to become better off financially? I drink only a lil alcohol, always ensure I am eating well but at advantageous cost, negotiate major purchases to the bone, dont buy what everyone else is willing to pay big costs for ie Honda/ Toyota NOT Merc/ BMW!, always educate myself thoroughly————– ad nauseum! NEVER pay high prices! Always position yourself to WIN!
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http://epaper.barbadostoday.bb/ (pages 3 and 9)
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The standard diatribe which occurs upon most takeover offers. AmBev could prove to be a star or a rogue. Right now this is about process. The SLU ownership of 40% automatically kicks in the takeover regulations. The BHL board has a responsibility to advise shareholders.
Yet, for transparency, doesn’t Chairman Tinks need to step aside? I mean he is also a director of Massy, and it is no secret Massy sold the large block to SLU. If Massy saw fit to sell their block at $4, how can he now as Chairman of BHL recommend to other BHL shareholders, they NOT tender their shares?
Plus Massy companies are heavily involved in the distribution end of BHL. Doesn’t one have a multi-year deal with Pine Hill?
Some other shareholders are on the Board. Time for one or more of them to offer their opinion.
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Lessons for BHL directors and shareholders
http://www.wsj.com/articles/ab-inbev-responds-to-sabmiller-rejection-of-takeover-offer-1444298479
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“Labatt buys Mill Street Brewery
the Labatt’s acquisition of the privately held Mill Street will help expand the brand into new markets, including Quebec.”
“Labatt — once an independent giant in Canada’s beer industry — was bought in 1995 by a Belgian group that has continued to grow by buying and merging with other companies around the world. The group, now called Anheuser-Busch InBev, is currently attempting to buy the world’s second-biggest beermaker SABMiller.”
http://www.thestar.com/business/2015/10/09/labatt-buys-mill-street-brewery.html
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@Hants
Thanks for the link. I had not read it.
The comments sound like those here on BU.
But that is the law of the jungle in an open capitalist economy.
Capitalism is not perfect, but what system is better?
Let the shareholders decide.
If Barbados wants to encourage FDI, it has to be seen a place where the investor is free to sell to the highest bidder.
BTW – I just did a search of the (Ontario) Beer Store website for Banks and got this result: “Your search returned 0 results. It’s okay, don’t panic. Crack open a cold one and try
again”
See http://www.thebeerstore.ca
Maybe AmBev will be able to get in the Ontario Beer Stores
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Off topic, but. If you check the Lcbo site you will find Banks, albeit discontinued. You are now tackling distribution in oligopoly prone Ontario (actually all provinces except Alberta) which is an issue unto itself. You won’t find cockspur either.
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Does the Financial Services Commission have the authority to examine a transaction that prompts a takeover bid, given the influence of that transaction on the takeover process? For example, is it illegal to make private side deals so that the published price for such a transaction may not be the full price agreed and would such an arrangement attract the attention of the Commission? And if the Commission has that authority, does it act on its own initiative or only at the request of an interested party?
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@Atrue Freeman
Can you identify a regulator anywhere who is not empowered to act in the face of wrong doing / irregularity?
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Then perhaps journalists will examine that aspect of this transaction with the FSC if the valuation shows that the $4 is unreasonably below the appraised value.
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Toronto, Canada.
Just bought a bottle of
BARBADOS HOT PEPPER SAUCE, imported by Shah Trading, product of TRINIDAD & TOBAGO. Note that I already have a bottle of Aunt Mays in the fridge.Used to buy Windmill but can’t find it.
Just one example of the Trinization of Barbados.
I also bought Shirley biscuits, MADE IN BARBADOS by Wibisco – Bermudez ( a Trinidadian owned company )
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@Hants
It is what Dr.Don Marshall refers to as the denationalizing of Barbados.
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It is NOT easy when you are a very small population next door to a much larger pop floating on Oil! Luckily the Trinis and others make mistakes by buying overpriced and non-performing assets. Think Almond! Think about all the expensive homes that were selling at $2mn which the Banks giving way at $600k! Had people kept their $$$ safe and conservative at the top of the cycle they would now be in a position to gobble up foreigners errors. Same thing happened when Japan overpaid for US assets in the 1980s and early 1990s. The half price Sale always comes eventually. I buy my houses AFTER the Crash!
Many Canadian Corps are owned by US interests. Some work well for the US and Canada and some FAIL! The mighty Merril Lynch retail, withdrew twice from Canada in the last 40 yrs.
When the Chinese wanted to buy Potash Corp we correctly said NO! Why? It is the biggest Corp in a business we are leaders in and the future is very bright for agriculture/ food crops with an ever rising Global population. However, we would allow China to buy into Oil/ Gas as we have many Corps in this sector and could benefit from working with China on exports, some of which would benefit many other Corps.
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@ Hants
“I also bought Shirley biscuits, MADE IN BARBADOS by Wibisco – Bermudez ( a Trinidadian owned company ”
+++++++++++++++++++
You don’t get it yet Hants…?
Was those biscuits not next to Sweet drinks labeled “MADE IN TUNAPUNA by SOLO( a Trinidadian owned company )”
Barbados / Tunapuna / San Fernando …. no difference…. 🙂
..all Trickidad.
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@ Money Brain
…not a good example.
Barbados is NOT Canada.
After the Trinis got hold of Almond they did NOT lose anything in the fire sale…. by that time they had milked it dry and more than recovered their investments…
…Management fees
…Tax avoidance
…profits declared
…and just using their management prerogative to move funds to head office.
Barbados is the BIG loser …now having a rotting liability where once we had a potential ‘Sandy Lane’ type asset.
Same shiite with BL&P.
By the time EMERA decides to ‘move on’ that will be a collection of old rusty machines from the 1980’s and a liability that we will have to pay someone to demolish,; borrow money to rebuild; AND then find other (scheming) foreigners to run (cause we have not been DEVELOPING local expertise) … meanwhile, have a good look at the levels of PROFITS being raked in yearly from BL&P even while investment in new equipment is NIL, growth is negative; and the competition from renewables is high.
Banks Holdings is next in line…
Buy it for ‘whatever’…
Close down any competition to foreign products
Close down any local ‘break-even’ schemes done in the national interests ..milk /juices..
Reduce investments / repairs / staff development etc ..and increase profits
Recover ‘whatever’ was invested …plus
Convert the brass bowl idiots from producers to consumers…
NO ONE in Canada would allow such clear rape of unique national assets by foreign mercenaries ….
…well – except for that ingrunt Bajan brass bowl wunna got up there … 🙂
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I have tried to refrain, but allow me to enter this discourse.
Barbados is a very small island and on the world scene is a very small economy. Growing up in Barbados, I remember how walking from St. Lucy to Holetown was seen as the equivalent as walking from New York to Miami. It is not.
I am not an economist, but I know that a large multinational company can enter or market and buy stocks and having bought these stocks they can act in such a manner so as to depress the stock prices. Without adequate ‘governmental’ controls, we will find local companies on the stock market being valued at prices well below their truth worth,
Until we abandon the fallacious thinking that company like a BHL can be considered the equivalent of an Apple we will have given away our birthright. It is time to abandon the free market policies and impose restrictions on acquisition and mergers. A fly does not negotiate with an elephant. Our notion of size is limited by or smallness.
I love Barbados and Bajans, but sometimes I consider our exchanges as nothing more than an exercise in self stimulation and verbal masturbation.
Stop it. Stop the nonsensical exchange and address reality. You are a pimple on elephant butt. You are at your weakest, when you think you are the elephant.
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as a national who is based in the US and who plans to stay there, I try not to interject my opinions on local; discussions. But sometime I get frustrated by the circular debate.
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Caswell, the current credit union model clearly attracts net borrowers, but appears to have very little to attract net depositors, notwithstanding that the recent reduction in the commercial bank interest rates has provided the credit unions with a relative advantage in this area. I think that one of the reasons usually given for credit unions not investing in shares is the reluctance to expose members’ funds to the higher risks associated with share investments. Do credit unions have the authority to create a “stock deposit account” where: interested members could deposit a portion of their funds for investing in shares; the credit unions would aggregate and invest the designated funds in shares on behalf of those members; and all dividends, capital gains and other income earned on the shares would be distributed to those members? If members are encouraged to allocate any amount that they are comfortable with ($5, $10, $50, $100, $500, $1000, $5,000, $10,000, …) the aggregate could be significant because of the thousands of members.
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LOL @ Observer
…bushie was wondering why you were so reluctant to share your observations.
Man don’t hold back… Interject …we need some REAL big city interventions to balance the likes of the ingrunt Canadian hit-men 🙂 …and don’t worry about the circular debates … most of life is based on cycles …. water constantly goes through one …and eventually, even political yardfowls like AC will take a drink….
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@ Atrue Freeman
Caswell will tell you a lotta shiite in answer to that question, so before he does that, let bushie give you the truth LOL
It is not true that the current Credit Union model attracts more borrowers than savers.
Many persons are attracted indeed because of the opportunity to borrow, but the ‘model’ ties such borrowing to concomitant savings…
Typically if you want to borrow $X you will need to have savings of $ (1/3)X , and to keep on saving even while repaying the loan. Often. members find themselves accumulating savings in the process that would otherwise NOT have happened.
Bushie is pretty sure that net loans in the movement do not exceed net savings.
The BIGGEST reason why Credit Unions do not invest in shares is Caswell, along with a clique of super-conservative outspoken members who feel that black people should keep out of big business….and stick with what works…
…Caswell don’t want the Credit Union to own a bank (although banks have been making MILLIONS in profits every year in Barbados)
…Caswell is against Credit Unions buying shares in business … he thinks that this will lead the leaders to mimic business people and steal all the money
…Caswell was against the Credit Union Insurance Company
…Caswell was against Capita
Caswell is a MAJOR asset in governance, but a total pest when it comes to visionary management and risk taking … 🙂
The point is that Credit Unions CAN invest; CAN become politically active; CAN own shares… but they are held back by conservative forces inside, by government policies (post Tom Adams) that seek to retard black enfranchisement; and of course by the Establishment – that wants to maintain the status quo…
Credit Unions need visionary leadership …like everything else in Barbados.
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@Bushie
According to the last financials 2011 updated on the BCCUL website savings lag assets.
http://barbadoscoopleague.org/cms/index.php/example-pages/2011-12-13-02-44-18?download=8:annual-report-2011
Must be more current financials.
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Bush Tea October 10, 2015 at 1:12 PM # Bushie is pretty sure that net loans in the movement do not exceed net savings.
I agreed that this is likely the case – the net savers funding the net borrowers and the few investments – but the net savers do not seem to really benefit. The results of the insurance company and the financial company do not appear to result in a higher interest rate on savings. And the same will likely apply to a bank. My suggestion is for the credit unions to provide a flow through service to willing members.
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Bushie,
Did you seriously read what I wrote how I distinguished between what we might sell and what we should keep? Canada/ USA is not a perfectly analogous situation to Bim and Tdad but it is close enough. If you have a better comparative please present it.
Bottomline the US is 9-10 times bigger than Canada in most respects excepting Geographic area where Canada is a significantly larger and fresh water reserves where Canada leads the entire World with 61% of Total.
Please note that Tdad GDP is approx US$ 10.7bn and Bim is $4bn. So you are right, relative to Bim , Tdad is much smaller at 2.675 X than the 9-10 of USA to Canada. The US is far more powerful and dominant compared to Canada than Tdad to Bim!
Bushie wrote–NO ONE in Canada would allow such clear rape of unique national assets by foreign mercenaries ….
I wish that were true! There have been numerous examples eg Vale of Brazil owns both INCO/ Falconbridge, Labatts is owned by AB Inbev.
I have advocated that Banks is a special situation, it is part of our fabric, our taste/ alcohol content etc. and that Inbev’s track record calls for extreme caution for many reasons. I was encouraged by the recent Advert caution BHL share owners to consider carefully. Where is the Govt???
What Bim’s leaders need to do is ensure the people are receiving an excellent PRACTICAL education in relevant disciplines and then do whatever is necessary to attract Foreign businesses and encourage locals via training, Professional retirees consulting, Entrepreneurial Centre/s etc.
Yes there are Cycles and one of those Cycles is that people with big, easily attained $$$$ like Japan in the 1980s and Energy Nations like Tdad will misallocate their wealth and eventually have to Sell assets at much lower prices. Regression to the mean, Bushie! The real question is whether Bajans who save at the Bank will appreciate when to pounce on the sweets?
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David, you seem to be looking at the league’s statements. These are the 2015 statements for public workers’ credit union – http://www.bpwccul.com/2015_annual_reports/consolidated/index.html#18/z. Should those high reserves in equity be allocated to the members as restricted balances, so that members may will such balances to their children and relatives before passing on. At some point in time, that equity will become available.
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COB 2015 report http://cobcreditunion.com/content/cob-annual-report-2015
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Anyone not listening to Louis Farrakhan on VOB is missing a vital educational experience…
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Final thread comment.
To answer the goodly professor, yes most companies traded on the local stock exchange, trade at a discount. The reason is they are CLOSELY HELD. Book value is less important than what they can produce (income). And their share return, which is therefore mostly ‘dividend only’ versus a combo of capital gain + dividend is poor. Many investors can do as well in fixed income.
BHL while being potentially wider held than most, was still dominated by its former BS&T holding. Without Massy selling, getting control is near impossible. Unless you bundled a few of the lesser blocks like Hadeed, Sagicor etc
In theory, because Massy is a Trini company, as is Blue Water, and SLU (or associated companies) isn’t Bajan either, one can say BHL hasn’t been owned by Bajans for some time. Bajans or Bajan companies maybe the majority of shareholdERS, but not the majority of the shareholdINGS.
And because they are closely held, the impetus to increase dividend is minimal. The larger owners getting a ‘nice piece of change’ annually.
Don’t pressure the smaller financial institutions. The loan experience of the big international banks in the Caribbean has been a disaster.
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Lessons for BHL directors and shareholders
Clock ticking for AB InBev and SABMiller over deal
“Markets will be watching to see if AB InBev now raises its bid from last week’s £42.15 per share offer. It had also previously bid £38 and £40.”
http://www.bbc.com/news/business-34499645
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Brasstacks is hosting a discussing on this transaction.
http://v5.player.abacast.com/v5.1/player/index.php?uid=6376
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Those who listened to Chairman Grenville Phillips of the Stock Exchange this afternoon heard him agree to a prevailing view on BU BL&P that NIS shares should never have been sold.
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“Patrick Hoyos is a journalist and publisher specialising in business. Next week look out for Caswell Franklyn.”
http://www.nationnews.com/nationnews/news/73197/black-white-backwards-future#sthash.oK5klj6s.dpuf
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Northern prowler, would being closely held justify a sizeable discount from the book value?
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@JR
First. Book value is a somewhat irrelevant measure in stocks. A guideline, nothing more.
So, could closely held stocks result in a sizeable discount in share price?
In principle no. Each shareholder is seeking maximum value, regardless of who owns how many. The BSE is a small exchange, so some amount of market manipulation is possible. However, they are instituting a minimum trade volume per listing to alter the board price to help eliminate this. In other words, You and I cannot agree to sell small quantities between ourselves, either pumping or dumping the price as we go along.
One might argue that since BHL has 5 owners who own 63%, and Cave Shepherd has 5 family members who own +/- 60%, they are similarly closely held. And over the past few years the shares in each have traded at +/-$3. However, Cave Shepherd had a few money losing years, where the dividend paid was 20c/share. While BHL never lost, and their dividend was 7c/share. And BHL had double the retained earnings of CS.
The argument, that failure of BHL to return more money to shareowners, in combination with admitted share dilution, resulted in the price discount noted on the exchange, has some teeth.
And did this happen because the directors, the shareowners representatives, failed to increase those dividends?
But look, BHL created their own monster; the funding formula for their new plant, opened the door. Based on sales, it is very unclear why they needed extra capacity. And if you read past annual reports, the sale of Wildey (which I don’t think ever happened?) was to pay for a good part of the new facility. Problems in Belize, problems with the Dairy, one phuck up after another. Now, AmBev has extricated them from their misery.
The potential buyers for an operation of that size are few. Beer marketing is a cut throat business. If you don’t have the brands, and subsequent production needs, why buy BHL?
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What is clear from the twitter being generated as a result of the BHL/SLU transaction is that we are followers.
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@ David
What followers what??!!
Followers actually MOVE…
We are stationary brass bowls….period!
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At a 3.4% dividend yield And no capital appreciation BHL shareholders have had a tough time of it.
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