Sep 2006 Financial News

JSE suspends trading for a day in BNS, DB&G shares

Sep 15, 2006

The Jamaica Stock Exchange (JSE) yesterday suspended trading in shares of the Bank of Nova Scotia Jamaica (BNS) and Dehring Bunting & Golding (DB&G) as the brokerage house's share price jumped 14.91 per cent on Wednesday after the Business Observer reported a possible acquisition of DB&G by the bank.

"The JSE's action is as a result of BNS's advising that discussions are underway for the acquisition of controlling interest in Dehring Bunting & Golding Ltd," the JSE said in a news release posted on its website. "The JSE's Board has said that it is deemed necessary to suspend trading to allow the entire market to absorb this information. Trading will resume in these shares on Friday, September 15, 2006."

Yesterday, Caribbean Business Report also learnt that the Trinidad & Tobago Stock Exchange (TTSE), where DB&G is cross-listed, could take a similar decision.

"Based on the fact that the JSE had suspended trading of BNS and DB&G, the TTSE general manager, Hugh Edwards, must speak to his counterpart in Jamaica to decide if suspension in Trinidad is prudent. However, up to the minute, no decision has been made," said a representative of the TTSE Operations Department who gave her name only as Mrs Lennon.

There is no trading of shares on the TTSE on Thursdays.
On Wednesday, the Business Observer reported that BNS Jamaica, in an apparent effort to grow its wealth management division, was set to acquire DB&G. The move, financial experts said, would give BNS an enhanced presence in the securities business while allowing the principals of DB&G to cash out on a high note.

For the period ending June 30, 2006, DB&G had $33.4 billion worth of funds under management, a growth of 10 per cent over the same period in 2005. However, net profit was $147 million, a marginal decline of 2.65 per cent from the $151-million earned in the June 2005 period.

On Tuesday, Mark Golding, DB&G company secretary, had declined to comment when contacted by the Business Observer, and the newspaper was unable to reach DB&G chairman Peter Bunting, president Gary Sinclair and Scotiabank's president and chief executive officer Bill Clarke.

However, on Wednesday afternoon, BNS confirmed in a statement that it "is in discussions regarding a possible transaction with a view to acquiring a controlling interest in Dehring Bunting & Golding Limited".

However, the bank said that there was no assurance that a transaction would result from the discussions and added that no further comment would be forthcoming unless the situation warranted.

"The Bank of Nova Scotia Jamaica Limited cautions that the success of such negotiations is not guaranteed, and any proposed transaction resulting from such negotiations would be subject to numerous conditions, including the obtaining of regulatory and other approvals," the bank said, adding that it issued the statement "at the request of the Jamaican Stock Exchange and Trinidad & Tobago Stock Exchange".

Yesterday, a Caribbean Business Report source said that members of the negotiating team were concerned that the one-day trading suspension in Jamaica was not enough. "They fear that once trading begins, speculators will push up the share price of both entities," the source said.

After the story broke on Wednesday, DB&G's share price moved from $16.10 to $18.50, an increase of 14.91 per cent. Brokers tell Caribbean Business Report that bids for DB&G are in the trading system for as much as $25 per share. This would represent a 35.135 per cent jump.

Yesterday, one local financial expert speculated that the deal for majority interest in the brokerage firm could be worth as much as Canadian $75 million.

With the possibility of higher valuations, sources close to the talks say that negotiators wanted at least one week's suspension of trading to give the relevant parties time to complete the necessary due diligence.

But one local broker yesterday questioned the wisdom of any such deal. Speaking on condition of anonymity, he said "BNS already have an extensive branch network, so they don't need DB&G's eight branches. It just doesn't make sense from a cost benefit analysis. This is a huge deal and all BNS really needs is a brokerage licence."


Source:
Dennise Williams
The Jamaica Observer
Friday, September 15, 2006

http://www.jamaicaobserver.com/magazines/business/