The Trinidad Cement Ltd. (TCL) board of directors is urging shareholders to reject an offer and takeover bid by Cemex through its indirect subsidiary Sierra Trading, reported The Jamaica Gleaner. The offer is aimed at raising Cemex’s stake in the Caribbean company from 39.5 percent to 74.9 percent for $89 million.
In a circular issued late last month, the TCL board of directors recommended that shareholders reject the TT$4.50 ($0.67) per share takeover bid, noting that the offer price does not reflect the "full commercial value of TCL."
The board argued that the shares of the company have a greater value than the offer price, which it said was "not fair, from a financial point of view, to the shareholders." Although the board did not state what would be a fair price, it advised shareholders that TCL is poised to benefit from the significant operational improvements made in August 2014.
"The company has experienced a turnaround after multiple past efforts to do so. The evidence of the turnaround is supported by the company's return to sustainable profitability in 2015 and continuing to produce positive net income throughout 2016," the board said. It also noted that there have been a number of operational and corporate restructuring that continues to generate positive value for TCL.
The TCL directors also pointed out that Cemex is only offering to acquire up to 74.9 percent of the issued shares of the company. One condition of the bid is that any shares in excess of that limit will be taken and paid for on a pro rata basis.
"In those circumstances, the remaining 25.1 percent shareholders may find that their shareholding has been depleted, and the board needs to consider the future of the company as it relates to the significant number of minority shareholders who will remain with a depleted minority shareholding," the board said.