Dec 2007 Financial News

Angostura bid for Lascelles clears regulators

Dec 21, 2007

Having conceded that its bid was really a takeover offer, Trinidad and Tobago's Angostura Limited has been cleared by Jamaican regulators to proceed with its move to acquire the Lascelles deMercado group, company and regulatory sources confirmed yesterday.

The offer was received by Lascelles Tuesday.

A press announcement will appear in Jamaican newspaper's today and the Lascelles board is expected next week to advise shareholders to accept the offer of US$10.65 per ordinary stock and US$0.30 for each of the group's six per cent preference shares.

"The bid has been mailed to shareholders and it has been sent Lascelles," the Jamaican firm's attorney, Jane George, said yesterday.

"The Lascelles board will issue a directors' circular no later than December 27."

Offer launched

Having previously reached an understanding with key Lascelles shareholders, chairman George Ashenheim and CEO William 'Billy' McConnell, Angostura should have formally launched its more than US$900 million offer over a fortnight ago.

But the Trinidadian firm, which produces rum and the world-renowned Angostura bitters, was stalled in its tracks by the Jamaica Stock Exchange (JSE) which ruled that what been portrayed was a bid for 49.24 per cent of Lascelles was in effect an offer for takeover. Under JSE rules, the threshold for a takeover is control of above 50, which triggers an offer for all the shares.

Documents comply

Yesterday, the JSE said: "The exchange, after extensive discussion with the parties involved, is satisfied that the offer documents which have been presented to shareholders comply with the Jamaica Stock Exchange's rules for takeovers and mergers."

Under Lascelles' complex structure, its 96 million ordinary shares - at a ratio of one to 1,600 - account for 60,000 votes, the same number of votes that are provided by its 60,000 preference shares. Through shares held in two vehicles, Calla Lilly Holdings and Snowdown (2007) Ltd control nearly 51 per cent of the votes.

Ashenheim and McConnell have an agreement to transfer approximately 47 per cent of the voting rights they control, via Calla Lilly, to Angostura.

Beyond threshold

Those votes, plus the stocks already held by Angostura, would push control by the Trinidadian firm beyond the JSE's takeover threshold.

But that was not how the deal with initially characterised by either Angostura or Lascelles.

They had suggested that Angostura's intent was to purchase on the market 86.48 million ordinary shares, less the portion it already owned, and another 4,972 of the six per cent prefs.

The ostensible take-up in this arrangement, on the face of it, would have been under 50 per cent of the voting rights, It later emerged, however, that there was the arrangement for Ashenheim and McConnell to later transfer Calla Lilly, with stocks accounting for 46.62 per cent of Angostura's voting rights, to Angostura.

Concern of regulators

Apparently, too, regulators were concerned that included in Calla Lilly's holding are over 9.5 million Lascelles stock, which, on the face of it, based on Angostura's offer price, would have been worth over US$100 million.

The draft offer document did not say why, given this apparent value, Calla Lilly was to be transferred to Angostura for $2.

Ashenheim and McConnell subsequently explained that they would have no personal benefit from those stocks.

The executives stressed had always held those shares in trust for stockholders, who would benefit from their value on the price they received for the stocks.

Had those 9.5 million shares been in the mix, they said, Angostura's offer would have been substantially lower.

It was likely to be partially with regard to this issue that the JSE in yesterday's statement noted in particular that it was satisfied that in the offer and supporting documents, Angostura had provided shareholders "with sufficient evidence, facts and opinions upon which adequate judgement and decision can be reached".


Source:
Jamaica Gleaner
business@gleanerjm.com
Friday December 21, 2007

http://www.jamaica-gleaner.com/gleaner/20071221/business/business2.html