NCB's new offer, a gift for GHL investors

Christmas has come early for minority shareholders of Guardian Holdings Ltd (GHL) as they now have a higher offer of US$2.79 (TT18.88) per share from Jamaican conglomerate, NCB Financial Group Ltd (NCBFG) in its takeover bid for the local insurance giant.

This enhanced price follows a previous increase in the offer of US$2.65 (TT$17.90) in November, up from the initial bid of US$2.35 (TT$15.88) per share a year ago, on December 8, 2017, NCBFG said in a statement on Tuesday, which was made public on the TT Stock Exchange on Wednesday.

Investor activist Peter Permell yesterday felt certain minority shareholders welcomed the group's decision to increase the revised takeover bid by US$0.14 per share.

"I think this will not only further benefit the minority shareholders but in the process NCBFG may have also done themselves a favour as this could only augur well for good Trinidad and Tobago GHL shareholder/investor relations going forward," Permell said in a statement.

Minority shareholders, led by Permell, had questioned the US$2.35 price offer made by NCBFG a year ago. It also subsequently emerged that in a May 2016 agreement NCBFG had paid US$3.24 (TT$21.96 at current exchange rate) per share to principal shareholders, businessman Arthur Lok Jack (a former GHL chairman) and the Ahamad family (Imtiaz, a GHL director, Shiraz and Reyaz), owners of a leading car dealership Southern Sales & Service Co Ltd, for their interests in GHL. This gave the Jamaican conglomerate a near 30 per cent stake in the TT group.

On November 16, NCBFG, through its subsidiary NCB Global Holdings Ltd, revised the first offer to US$2.65 before this week's new price which it said is consistent with the 2016 agreement made with Lok Jack, the Ahamad family and affiliate investors.

"Pursuant to the such amendment agreement, the aggregate increased offer prices is to be partially financed to the tune of US$45 million by vendor financing to be made available to NCBFG by the key shareholders," the group said in its statement.

The activism of minority shareholders since December 2017 led to several hearings by the Securities Exchange Commission on the takeover offer over the past year, one as recent as November 22, and even a $300,000 "administrative fine" against GHL over the transaction.

Permell yesterday said the gradual increases in the offer were due to minority shareholders' demand for a better and fair deal.

"I view this development as further vindication of the decision taken, by yours truly and a small group of minority shareholders who had the temerity...to challenge, pursuant to by-law 13 of the Securities Industry Take-Over By-Laws 2005, the original offer of US$2.35 per share that was made in December last year," he said.

GHL's share price rose for a second day on the TTSE since Wednesday's announcement. It closed yesterday at TT$18.41 up 68 cents, the largest gain on the market. The day before it rose by 77 cents. NCBFG rose marginally by eight cents to end on TT$8.58, although it traded the most shares–29,270 for TT$251,066.30.

In its third quarter results to September 30, GHL's profit attributable to equity shareholders was an estimated $371 million, and increase of $117 million, or 46 per cent, over the same period last year. Overall, its profit before taxes was $487.1 million, up from $328.9 million, and earnings per share was $1.60 up from $1.10 in September 2017.