Caribbean Cement to migrate to Mexican ownership - Cemex to delist Jamaican operation from stock market after TCL takeover
Cemex's takeover of Trinidad Cement Limited (TCL), if successful, will also give it majority control of Caribbean Cement Company Limited, and the Mexican powerhouse has said it will take the Jamaican operation private by delisting it from the stock exchange.
Cemex Group currently owns just over a third of Rockfort, Kingston-based Caribbean Cement, through its current stake in TCL and through an entity called Scancem International, which directly holds 4.96 of Caribbean Cement stock. TCL itself owns 74 per cent of Caribbean Cement.
The Jamaican cement maker's stock price has climbed by more than $4 or nearly 15 per cent in the past two days, since the launch of the TCL bid.
Cemex's ownership in TCL is through an entity called Sierra Trading, the same entity it is using for its bid for up to 35.4 per cent more of the Trinidad cement maker - which would increase the Mexican company's overall stake in TCL from 39.5 per cent to 74.9 per cent. Sierra Trading is a full subsidiary of Cemex Espana.
TCL operates subsidiaries in various regional markets. Cemex said in its offer circular for TCL shares that it will be "delisting TCL and some of its subsidiaries" from exchanges outside the regional producer's home market in Trinidad, if it acquires control of the regional cement operation.
Sierra is making an offer for 132.6 million ordinary shares in TCL for TT$4.50 per share. That's a 33 per cent premium on last Friday's trading price of TT$3.38 on the TTSE, and a 47 per cent premium on the $58.50 stock price on the JSE.
The offer opened Monday and closes January 10.
Cemex is prepared to pay US$89 million for the increased stake. The offer values TCL at TT$1.68 billion.
A year ago, TCL was trading at TT$4.75 per share. Cemex, however, argued that the deal price meets international standards.
"Those premiums compare favourably to the 29.1 per cent average premium paid for global deals under US$1 billion in the last fifteen years and the 30.1 per cent average premium paid for all deals above US$500 million in the last fifteen years, as reported by the Securities Data Company," said Cemex in the offer document released on Monday.
Cemex will maintain the listing for TCL on the Trinidad & Tobago Stock Exchange, but plans to delist it and its subsidiaries from other regional stock markets in Jamaica and Barbados.
A successful offer for TCL would up its ownership of Caribbean Cement to around 60 per cent. To delist, it would need to acquire at least another 20 per cent of the shares held by minority owners.
Caribbean Cement stock traded at $28 on the JSE on Friday, but has since climbed to $32.17 per share. That's still slightly off its one-year high of $34 per share.
SERIES OF INTEGRATION STEPS
The consideration for delisting TCL subsidiaries is among a series of integration steps planned by Cemex, if it completes the acquisition of the shares. It will also conduct a comprehensive review of TCL group businesses, capitalisation and corporate structure, via Sierra Trading, as part of a plan to integrate Trinidad Cement into the Cemex Group. Cemex owns 99.88 per cent of Sierra Trading.
"Sierra believes that by integrating the TCL Group into the Cemex Group's global operations, it will not only assist the Cemex Group in achieving its purpose and mission, but at the same time will allow the TCL Group to continue improving its overall performance," the offer document stated.
Last year, Cemex helped to recapitalise TCL under a deal in which it increased its equity stake in the Claxton Bay-based cement manufacturer, but agreed to keep its ownership below 40 per cent. Its new acquisition bid now promises to cap its ownership at 74.9 per cent.
Cemex is a 110-year-old building materials company employing over 43,000 worldwide and whose markets span more than 50 countries. Its net sales in 2015 totalled US$14 billion.