The lack of a takeover code in The Bahamas has caused some to question how protected small shareholders will be under the proposed $12 million hostile takeover of AML Foods by the City Market parent company Trans-Island Traders.
The regulator, the Securities Commission of The Bahamas (SCB), is in unchartered territory, with proposed regulations governing any takeover existing only in draft form, about to go to the industry for comment, according to SCB Chairman Philip Stubbs. The bid to acquire a 51 percent stake in AML, announced Sunday, has executives of both companies making claims to not only majority shareholders, but minority holders too, in a bid to woo their support.
“I think the board of AML is very, very mindful of what happened in the City Market situation where minority shareholders were essentially wiped out,” said Dionisio D’Aguilar, AML Foods Chairman. “So we have to make sure that we act in the best interest of all shareholders.”
Trans-Island Traders is planning to make a tender offer to purchase the 51 percent stake at $1.50 per common share. This would mean if all common shareholders accept the offer, they would end up with 51 percent of their shares sold currently at around 50 percent above the market price. However they would retain 49 percent of their holdings.
“In most jurisdictions of the world—Canada, the US, the rest of the world—this would be illegal,” said D’Aguilar. “You have to tender for all of the shares. You can’t tender for just 51 percent of the shares. That’s what we’re really mindful of. I think you can get away with it in this jurisdiction, but it’s fresh in everybody’s mind what happened to the City Market minority shareholders.”
According to D’Aguilar, when Winn Dixie made its exit from City Market it left 22 percent of the shareholders ‘at the table.’ “They were virtually wiped out,” he said.