Wed | Feb 21, 2018

NCB extends Guardian offer, locks in key shareholdings

Published:Wednesday | January 17, 2018 | 12:00 AMSteven Jackson/Senior Business Reporter
Patrick Hylton, President and CEO of NCB Financial Group Limited.

The takeover bid by Jamaica's banking conglomerate NCB Financial Group (NCBFG) for Guardian Holdings Limited will extend to February 2 amid signs that minority owners of the stock might be lukewarm to the offer.

However, the Trinidadian parties who initially sold a portion of their holdings to the Jamaican banking conglomerate in 2016 including Arthur Lok Jack and Imtiaz Ahamad and several of their affiliates will sell their remaining shares to NCB under the current offer.

Those holdings of the 'key shareholders' amount to 21.84 per cent, according to a notice from NCB last Friday, January 12, the day the offer was initially to close.

NCB wants to increase its stake in GHL from 29.99 per cent to 62 per cent, in line with an agreement struck with the key shareholders when it bought the Guardian stake in 2016.

"The agreement required NCBFG to make a takeover bid within the following three years to gain a minimum of 62 per cent of the outstanding GHL shares and that the key shareholders agreed to tender all of their GHL shares," the notice said.

The current offer by NCB Financial, through NCB Global Holdings Limited, is valued at US$174 million or US$2.35 per share.

With the 21.84 per cent locked in from key shareholders, NCB would only need 10.17 per cent more to hit the 62 per cent target, but efforts to ascertain how close it is to that goal were unsuccessful.

The broker for the transaction, Republic Securities Limited, told the Financial Gleaner they could not comment on the reason for the extension of the offer, beyond the information in the notice; nor disclose the level of participation by minority shareholders up to Tuesday, saying such information was yet to be made public.

The initial acquisition of 29.99 per cent was completed on May 12, 2016, giving NCB Financial an interest in 69,547,241 Guardian shares at US$3.24 per share.

At the time of that agreement in 2016, the parties committed that NCB would make a future takeover bid under the following conditions: if the offer was made up to May 12, 2017, NCB would offer a minimum price of TT$17 per share; up to May 12, 2018, the price would be TT$18 per share; and up to May 12, 2019, the offer would be made at TT$19 per share, as stated in the NCB notice.

Based on current exchange rates, the offer now on the table converts to just under TT$16 per share, which is shy of Guardian's current trading price. The stock closed at TT$17.01 on Tuesday, suggesting that some minority shareholders are choosing to trade among themselves while ignoring the offer.

NCB Financial paid J$28 billion for its initial stake in Guardian. The current offer converts to nearly J$22 billion.

business@gleanerjm.com