Sat | Oct 20, 2018

Berger Jamaica directors say yes to takeover offer

Published:Wednesday | September 20, 2017 | 12:00 AM

The directors of Berger Paints Jamaica are recommending that minority shareholders accept the takeover offer from new owner ANSA Coatings International Limited, whose bid for the shares was made at nearly one-third discount on the prevailing market price.

ANSA Coating has said the bid price replicates the value placed on the holding under the deal completed in July to acquire the regional holdings of Berger Paints. The offer remains open until the newly extended date of October 9.

ANSA is offering $10.88 per share for each Berger share, which traded at $15.81 on the day prior to the mandatory takeover offer on August 31.

The Berger Jamaica stock had been rising constantly since the start of the year and began trading above $10 towards the end of January. It peaked at nearly $24 around midyear but has fallen back to $11.

ANSA Coatings would spend $1.14 billion to buy up all the outstanding 48.99 per cent of Berger shares held by minority owners at the offer price. Shareholders may opt for payment in foreign currency at US$0.08485 per share.

Scotia Investments Jamaica Limited is the lead broker for the offer, with Hart Muirhead Fatta as legal adviser. The offer opens on September 7 and closes September 28.

ANSA indirectly holds 51 per cent and requires 29 per cent more to start the process

of delisting the shares. Additionally, if ANSA acquires more than 90 per cent of Berger Jamaica, it could invoke the 'squeeze-out' clause that would force compulsory acquisition of the remaining shares.

The directors' circular argued that rejecting the bid in anticipation of a better one could result in shareholders losing out twice.

"In other words, a dissenting shareholder whose Berger Jamaica shares are compulsorily acquired will lose at least five months or potential interest on his sale price. It should be noted that even if ANSA acquires sufficient Berger Jamaica shares to effect compulsory acquisition of the Berger Jamaica shares remaining in the hands of dissenting shareholders, it may elect not to exercise its right to squeeze out the remaining minority," the directors stated.

The offer was reviewed by the independent directors of the board Michael Fennell, Warren McDonald, Pokar Chandiram and Milton Samuda who formed a special committee that excluded the three ANSA appointees.

In June, ANSA signed an agreement to fully acquire Lewis Berger Limited (LBOH), which holds Berger Paints assets in Jamaica, Trinidad and Barbados. It gave the Trinidad company indirect ownership of 51 per cent of the Jamaican operation.