Mon | May 29, 2017

Cement shares see-saw after new Cemex offer

Published:Wednesday | January 11, 2017 | 1:00 AMSteven Jackson
The TCL plant at Claxton Bay in Trinidad & Tobago.

Cement shares in Jamaica and Trinidad moved in different directions on news of an increased buyout offer by Cemex of Mexico.

The shares of Caribbean Cement Company, based in Jamaica, fell six per cent on Monday to close at $31.46, while the shares of its parent Trinidad Cement Limited (TCL), the target of Cemex's planned takeover, gained two per cent to close at TT$4.54 on the Trinidad stock exchange with roughly 121,500 units trading.

This was the second-highest volume traded for

TCL since the initial takeover bid was unveiled on December 5.

Cemex SAB first offered TT$4.50 per share for the Trinidad-based cement maker, but improved on its offer on Monday to TT$5.07 per share after directors of TCL said the original price was not a true reflection of the regional cement maker's commercial value.

The new price values the company at US$1.9 billion.

The TCL stock traded up even further on Tuesday to come within striking distance of the new offer price, closing at TT$5.05 per share on the exchange based in Port of Spain.

Shares in the Jamaican subsidiary also closed up at $32.68 on Tuesday on the Kingston exchange. But the cross-listed TCL stock remained unchanged at $63 per share, having not traded since December 15.

The Gleaner sought opinions on the new offer from various brokers and analysts, many of whom declined or did not comment up to press time.

Cemex already owns 39.5 per cent of TCL through Sierra Trading, and aims to increase its stake to 74.9 per cent. The Mexican company promises that TCL will remain listed. Its amended offer closes on January 24.

CURRENCY OF CHOICE

Assuming full acceptance of the offer, Cemex says Sierra will pay cash amounting to TT$672 million (US$101 million) to subscribers, with payment either in Trinidadian or US currency, based on preference.

The December 5 offer would have amounted to a payout of $89 million.

The revised price represents a premium of 50 per cent over the December 1, 2016 closing price of TCL's shares in the Trinidad and Tobago Stock Exchange, added Cemex.

TCL directors, based on the advice of auditors Ernst & Young (EY), described the December offer as "not fair". The directors issued a circular advising shareholders to read the assessment by EY prior to making a decision to sell or hold their shares.

The TCL directors and the redacted fairness opinion by EY avoided listing a fair price or value.

TCL's 10 directors and/or senior managers listed in the circular all hold shares directly or indirectly in the group. Director Ruben McSween indirectly holds the largest block, 44.6 million units, followed by chairman Wilfred Espinet, who directly holds 10.28 million units.

steven.jackson@gleanerjm.com