There’s no need for doom and gloom about the Banks Holding Limited (BHL) takeover, according to the Barbados Economic Society (BES) and the Barbados Private Sector Association (BPSA).
BES President Jeremy Stephen and BPSA Chairman Alex McDonald told Barbados TODAY it was simply a case of business as usual and it was unlikely to trigger any major ripple effects in the short term.
“From a business standpoint I see nothing really wrong with it. If there is a valuable asset for sale to be bought, these are transactions that happen all the time, “ said Stephen.
McDonald agreed suggesting it was a win in terms of foreign direct investment the island desperately needed.
“Essentially we have a very attractive local company which has been attracting a lot of attention from overseas investors and that’s a credit to good old management and a compliment to the way that we run our interests that we have in the market. Foreign direct investment is a wonderful thing,” the private sector leader said.
However, Stephen, a lecturer in the Department of Economics at the Cave Hill Campus, quickly waved a red flag over the Trinidadian company ANSA McAL’s decision to challenge the SLU Beverages Limited’s purchase BHL shares at $4.00.
He suggested that the move by ANSA McAL to upstage SLU, which is owned by the Brazilian company AMBEV, by taking the share price to $5.20 would be considered in more developed financial markets to be “unethical”.
“The reason why – is the fact that it [ANSA McAL] is seemingly going to form a regional monopoly or at least have a very monopolistic hold on the market, he said, while noting that ANSA McAL, which has its own drink brand, was now seeking to take over a Barbados drink brand with considerable reach in the Eastern Caribbean and Guyana.
“Ironically, outside of the Banks product itself, [BHL’s] Pine Hill Diary products are very popular in Guyana and from what I understand a bit in Suriname as well. So it seemingly is a very monopolistic move, a hostile kind of takeover,” Stephen added.
He said the pending transaction also raised questions about the true value of BHL.
“[Is] the brand’s reputation is so stellar because of market reach, because of management capacity, or is it because we have been under-marketing the beer for far too long?” the economist asked.
McDonald did not entirely share Stephen’s concern but admitted the takeover would represent a “consolidation of the beer and beverage industry”.
Neither he nor Stephen were worried however that a take over of this island’s largest beverage manufacturer would lead to short term closure of the company and job losses.
They also dismissed concerns about another foreign interest taking over a top Barbadian company.
Stephen said while he was “a bit ashamed” that another local company with a lot of international potential and high regard was the subject of a takeover bid, Barbadians should take a hard look at themselves and how they viewed business.
“It’s almost ten plus years after there was a wholesale sweep of Trinidadian companies coming in and buying up prime Barbadian assets. . . but it does speak to some of the deficiencies that we do have in this economy with what is our perception of risks,” he said.
The economist reasoned that “if Barbadians were heavily invested in such entities we could really have driven the share price way higher and ANSA McAL may not have find it favourable.”
McDonald also questioned why local interests did not make a play for BHL.
“I think that may have to do with the access to capital and the ease of getting money at a rate that can make an investment like that reasonable,” he suggested, adding that “again we have to look at the financial structures we have locally”.
Both men suggested that better days could be ahead for BHL, forecasting that the new owner was likely to invest and position the company for expansion.
“We have had inherent problems in managing costs and efficiencies at the factory. Even when the new BHL brewery was set up in Christ Church you had your challenges as well as those related to diary production. Maybe these guys coming in with this extra capital could really help. Who knows!” Stephen remarked.
“By and large I think that most companies that would have been subject to buyouts, or mergers seem to be doing pretty alright. The big challenge for us will be how do we adapt to their culture and how do they adapt to our culture. That will be the interesting difference and their commitment to the Barbadian economy,” said McDonald.