Mexico's cement giant, Cemex, yesterday announced that it is making a takeover bid for Claxton Bay-based Trinidad Cement Limited (TCL).
Cemex, through one of its indirect subsidiaries Sierra Trading, is looking to acquire 132,616,942 shares at a price of $4.50 in cash per TCL share, the Mexican company said in a statement issued in Port-of-Spain, New York and Mexico City yesterday.
The bid, if successful, would result in Sierra holding up to 74.9 per cent of the equity share capital in TCL. Full acceptance of the offer would result in a cash payment by Sierra of approximately $597 million (US$89 million).
Sierra's existing share ownership in TCL is approximately 39.5 per cent.
The proposed offer price represents a 33.13 per cent premium over TCL's price of $3.38 at the close of trading on Friday.
Cemex currently owns 39.5 per cent of TCL, which announced at the end of October that its revenue had declined by 12.2 per cent for the first nine months of 2016, which it said had been caused by a "precipitous fall in construction activity in Trinidad and Tobago.
The offer will be conditional on Sierra acquiring at least an amount of TCL shares that would allow Cemex to consolidate the local company. Unless extended, the offer period is expected to close on January 10,
Cemex said if the takeover is successful, TCL will continue operating as usual and will be maintained as a publicly listed company on the T&T Stock Exchange.
TCL's main operations are in T&T, Jamaica and Barbados and the company is the majority shareholder of Caribbean Cement Company Limited CCCL) in Jamaica.
As of September 30, 2016, TCL and its subsidiaries had earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately US$77 million for the last 12 months, net debt of approximately US$113 million,. If the takeover bid is successful, TCL would be consolidated by Cemex.
"This Offer represents a clear sign of our commitment to TCL and the region. In addition, although we believe that our Offer is attractive given the premium to the current share price, as part of this commitment, it is also important to us that TCL remains a listed company, so that local investors can continue to benefit from the development of TCL in the future," said Fernando A. Gonzalez, CEO of Cemex.
"We look forward to continuing our strong relationship with TCL."
In a statement yesterday, minority shareholder activist, Peter Permell, said the takeover bid was not only expected, but he predicted it. He said now that a bid has been made, a directors' circular must be prepared and delivered by the board of directors of the target (TCL) within 21 days of the date of the bid, pursuant to Section 15 of the Securities Industry Take-over By-Laws, 2005.
He said that in the directors' circular, the directors are obliged to recommend acceptance of the bid, rejection of the bid, or be neutral by not making any recommendation at all. In the event that no recommendation is made, the directors must state the reasons for not making same.
According to Permell: "It is worth mentioning that no well-advised board of directors should venture to express a recommendation in relation to a particular takeover bid or express views as to its fairness without the advice of independent professional investment bankers.
"This advice is usually given in the form of a written opinion (which opinion may speak not only to the fairness of a particular transaction but also as to valuation issues)."
Cemex is a global building materials company, which was founded in 1906 and had revenues of over US$14 billion in 2015.
On the local stock market yesterday, TCL traded 608,138 shares, adding $0.11 to close at $3.49 per share.