Musson to cement control of Seprod through $1b takeover offer
HAVING RECENTLY purchased a small number of shares that upped its stake in Seprod Limited to just above half of the manufacturing and distribution group, the Musson Jamaica conglomerate is making a takeover offer for more shares in line with market rules.
On January 5, Musson Jamaica Limited purchased 1,630 shares in Seprod, which gave the group a stake of 50 per cent.
Now it has made a bid for another 13.948 million units in Seprod, representing an additional 1.9 per cent stake, through Musson Investments Limited.
The offer is being made at $78 per share, which represents a discount relative to the $84.12 price at which the stock settled on Friday.
Friday’s price put Seprod’s market value at $61.7 billion. The Musson offer price would discount that by over seven per cent to $57.2 billion. However, the bid price reflects what Musson Jamaica paid for the shares purchased on January 5.
If the offer is fully subscribed, Musson would shell out nearly $1.09 billion for the shares. And its stake would rise to 51.9 per cent.
Seprod CEO Richard Pandohie declined to comment on the size of the bid, saying he was constrained by market rules.
Musson’s move to claim outright majority control of Seprod comes as the company has grown exponentially larger from its majority takeover of a large consumer distribution company in Trinidad and Tobago.
Since that takeover, Seprod had listed its new subsidiary, AS Bryden & Sons Holdings Limited, on the Jamaica Stock Exchange (JSE). The listing ‘by introduction’, which means none of the shares were offered to other investors for subscription, happened on November 9 last year.
Musson Jamaica, also referred to as Musson Group, is itself a large private conglomerate, which a decade ago was doing more than US$1 billion in annual sales. No current numbers were available on the private operation.
Under JSE rules, companies that acquire above 50 per cent are generally required to issue a takeover offer for the remaining ordinary shares. Musson Group actually ended up with a stake of 50.00003 per cent following the transaction earlier this month.
The conglomerate is a diversified holding company with significant stakeholdings in listed and private companies including General Accident Insurance, Seprod, Productive Business Solutions, AS Bryden, Geddes Grant and Canopy Insurance.
Seprod continues to outperform risk-free investments based on its rising return on equity, which currently stands at around 12.2 per cent. Its profit performance over nine months ending September surged by 51 per cent to $4 billion, fuelled primarily by the AS Bryden acquisition and higher exports.
The company’s outlook remains bullish with management expecting to double revenue to US$1 billion in about two years.
Musson’s offer for the Seprod shares opens on January 24 and runs to February 15. The lead broker is JMMB Securities Limited.