Yesterday's announcement by Mexican cement giant Cemex that it now controls 70 per cent and counting of TCL, the Claxton Bay-based regional cement producer, is a significant and potentially positive development for T&T.
The transaction favours TCL's 6,000 shareholders as the Cemex bid allows them to cash out of the company at $5.07 per share, which is a 50 per cent premium over the price the local company was trading at before the takeover offer was announced.
Further, many local investors in TCL may have been encouraged to accept Cemex's amended offer, because not only was it increased to $5.07 from the initial offer of $4.50, but shareholders were given the option of receiving payment in US dollars at US$0.76 a share.
The US dollar option would have been decisive to many wavering local shareholders given the chronic shortage of the foreign currency at local commercial banks and the active black market that has resulted from the shortage.
The takeover of TCL by Cemex acknowledges the long-standing relationship between the two companies, as Cemex first purchased a 20 per cent block of shares from the government in 1994, more than 22 years ago.
The relationship between the two companies changed after TCL shareholders voted to change the board and management of the company at a special general meeting in August 2014.
With the local company on the brink of bankruptcy, TCL's new board, led by local business executive Wilfred Espinet, opted for a deeper relationship with Cemex, instead of the antagonism that had been shown by the previous board.
That deepening of the ties between the two companies led to the introduction of new Cemex executives at TCL, as a result of the implementation of a technical and managerial services agreement.
The deepening of the relationship also allowed TCL to restructure its debt on favourable terms.
The debt restructuring was also facilitated by a rights issue in March 2015, through which TCL was able to raise US$57 million.
It is noteworthy that Cemex spent US$44.85 million of its own money in the TCL rights issue, which resulted in its stake in the local company increasing to 39.5 per cent from 20 per cent.
When its US$44.85 million rights issue subscription is added to the US$86.87 million it has spent so far acquiring TCL shares in the takeover bid, Cemex would have spent nearly US$132 million in increasing its stake in Cemex to 70 per cent from 20 per cent.
That amount is likely to increase as the offer remains open in Jamaica until February 7.
The combination of the new capital from the rights issue, the debt restructuring and changes to the executive management contributed to TCL declaring earnings per share of $1.19 in 2015, which was the company's best financial performance in more than a decade.
There are those who would criticise Cemex taking control of TCL as being a deviation from the trajectory of greater local ownership that T&T has pursued in the last four decades.
While there is much to be said for local ownership, at the end of the day, TCL is a company that is owned by its shareholders, both individual and institutional.
Those shareholders took decisions to offer their shares to Cemex based on what they perceived to be their best financial interests.
While there is much to be said for local ownership, at the end of the day, TCL is a company that is owned by its shareholders, both individual and institutional. Those shareholders took decisions to offer their shares to Cemex based on what they perceived to be their best financial interests.