Notes From The Margin

October 16, 2007

Did Ansa McAl’s Bluff Get Called?

IN the most unexpected outcome of the whole saga both Ansa McAl AND Neal & Massey withdrew their bids for Barbados Shipping & Trading today.

Neal & Massy Chairman, Arthur Loc Jack, was first to break the news of his company’s decision “to tender Neal & Massy’s 28.1 per cent shareholding in BS&T to the ANSA McAL offer and will be recommending that BS&T shareholders who had previously tendered their shares to the Neal & Massy offer, as well as those who had intended to do the same, also accept the McAl offer”.


However this was not the case as in very short order Ansa McAl issued a press release withdrawing THEIR offer.


“This decision was taken after extensive and in-depth consideration of all the factors, both positive and negative, that have influenced our ability to acquire 50.1 per cent of BS&T shares as well as to execute our stated plans to improve the performance of BS&T in the future,” it said.

“The timing of this decision was also considerate of the many BS&T shareholders who have deposited their shares with ANSA McAL that will now have the opportunity to accept the offer of the competitor, Neal & Massy Holdings Limited (N&M), before the close of their bid on Thursday 18 October, 2007.”


Now this would seem to be too much of a coincidence to us on the Margin that they should both choose the same day to withdraw and to offer each other their shares. Neal & Massey’ s Chairman Mr. Lok Jack flew to Barbados to make the announcement, Ansa McAl issued a press release.


Looking at what happened our interpretation on this is that both companies came to the conclusion that at $10.00 per share, BS&T was no longer a bargain. Neal and Massey having earlier said that “they would respond” to the Ansa McAl bid, decided to bow out rather than raise their bid of $8.50. Ansa McAl realising that they would be stuck with buying BS&T at $10.00 and having to foot all the costs of restructuring the company, hurriedly withdrew as well, rather than pony up the cash required.


This all leads us to believe that much of this whole bid was aimed at making their Trinidadian rival pay handsomely for BS&T and was not supposed to buy the company in the first place. To say that this withdrawal is an embarrassment to them would be an understatement.


So this then leaves us several unanswered questions:


1. What of the local consortium (or are they about to fade into the woodwork as well)?


2. What happens now with the current board of directors of BS&T? We think that their initial actions require some explaining.


3. Does BS&T still want to pursue a merger and is it seeking strategic partners? (which is what started this whole mess)


One thing we can all be sure of that the BS&T story still is not over, however it would seem that a new chapter is about to begin.




  1. NFTM, I think that the major issue is what effect will the withdrawal of the takeover bids of both Neal & Massey and Ansa-McAl have on the value of BS&T’s shares. There seems to have been a general opinion among investment analysts that the trading values of BS&T shares had been greatly understated. Some of these persons had argued that the traded prices of the shares did not reflect the values of the usable assets held by BS&T, and had even implied that BS&T shares could command a price of up to BDS $15.00. However, I do not believe that the traded price on the BSE since the takeover announcement ever exceeded BDS $8.65, and this was largely through the efforts of the Brewer/Hoyos consortium. Incidentally, the price of Neal & Massey’s most recent purchases on the T&T stock exchanges was TT $28.35 or about BDS $9.00.

    Are we not, now, likely to see a fall in the traded values of BS&T shares? Reading between the lines, this may well be the intention of the two suitors, since they have both implied that the price they would have to pay would have inhibited them from obtaining the financial results from the conduct of BS&T’s operations that they desired.

    Incidentally, I have looked at the conditions of the offer by both Neal and Massey and Ansa-McAl, and I do not think that any of the conditions that they stated would trigger a decision to withdraw it have been applicable. I note however that Ansa-McAl’s spokesperson was reported by the Trinidad Guardian as follows: “ANSA McAL chief operations officer Gerry Brooks told the Guardian last night that the country’s largest conglomerate had decided to withdraw its bid for BS&T because of the “apparent hostility” of the Barbadian company’s board.

    “The BS&T board continuously rejected any offer of partnership from ANSA McAL,” said Brooks, adding, “There was no spirit of cooperation, no engagement between the boards, no discussion of the merits of our potential partnership or its benefits to BS&T shareholders.”

    Brooks said BS&T’s most recent directors’ circular, dated October 5, was a recommendation supporting the Neal & Massy bid, “notwithstanding ANSA McAL’s premium of Bds$1.50 per share.”

    According to Brooks, “In light of the clear position of the BS&T board favouring Neal & Massy’s bid and, recognising the apparent hostility of the BS&T executive management team, ANSA McAL reluctantly decided to withdraw its offer.”

    In addition, in their advertisement appearing on page 11 of today’s Daily Nation (12/16/07) Ansa-McAl claims that it has recently become aware of plans by BS&T to undertake a significant business acquisition in the Caribbean, and notes that this additional liability if incurred may have an impact on the company’s financial performance.

    As to the three questions that you ask, I would say as follows:

    – 1) the local consortion may have paid a price for acquiring BS&T share without achieving any leverage over the future operations of the company;

    – 2) when the shareholders of BS&T meets, the Directors will have to account to them for their performance, or the absence thereof; and

    – 3 under current management BS&T will remain vulnerable to any takeover bidder with sufficient liquidity and acquisitive intent.

    Comment by linchh — October 16, 2007 @ 7:35 pm | Reply

  2. I think it’s fairly clear that the value of the shares will fall. However I would be grateful if anyone could enlighten us as to what the acquisition noted by Ansa McAl is.


    Comment by notesfromthemargin — October 16, 2007 @ 7:53 pm | Reply

  3. 1. How did N&M’s position get to 28.1%? Or is it more? Seems that subsequent to their public offer, they bought 3-5-?? % via the T&T exchange at a price higher than their public offer? The sellers all seem to be Bajans. Did this spook ANSA? It is a legal move by the way in T&T.
    2. On most exchanges a trading halt would be placed on BS&T on all exchanges trading the stock, until a resoloution to prevent such moves.
    3. The Board’s role is whatever is in the best interest of the shareholders, not the employees. Rejection or embrace should be based on shareholder value, and with competing bids, embracing is questionable, their objective is to get more than $10 per share.
    4. Pending acquisitions & mergers is bullshit, that can be legally manouvered.
    5. What is the upset price today?

    Comment by SouthernAccents — October 19, 2007 @ 9:24 pm | Reply

  4. NFTM, it was revealing to hear a former manager of the Barbados Stock Exchange say on today’s (10-21-07)”Brass Tacks” discussion programme that the recent developments in the competition between Neal & Massey and Ansa-McAl for majority ownership of BS&T should be thoroughly investigated by the Securities Commission.

    Unless the obvious infelicities in the trading process are corrected, small shareholders are likely to see their interest severely damaged when any major trading activity takes place.

    Comment by Linchh — October 21, 2007 @ 5:39 pm | Reply

  5. We have written several articles on the needs for BS&T to remain in local hands for all the obvious reasons. This talk about forming a pan-caribbean company is crap. BS&T needs to be infused with more enterprising management skills and a quick way to do it is to fir Alan Fields. Under his management BS&T has become a mouse. We know that this deal is far from over so we will wait before we offer further comment. At this point we think that Barbadians should get the idea that we have the power.

    Comment by David — October 21, 2007 @ 7:52 pm | Reply

  6. I think that there are several issues here that do not bode well for the future of the stock exchange, and the development of an investment culture in Barbados.

    At the time of writing this comment it is clear that this is not simply going to go away. The IPL group is threatening to litigate, and some extremely pointed questions are being asked about both Trinidadian companies as well as the actions of the board of BS&T.

    It will be interesting to watch this play out.


    Comment by notesfromthemargin — October 22, 2007 @ 7:55 pm | Reply

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