AML buyout stalled
City Market’s $12 million plan to purchase a majority shareholding in AML has been momentarily blocked by the Securities Commission, which has suspended the trading of AML shares.
It’s a move likely to give the regulatory body enough time to formulate an official takeover guideline for the securities industry.
Late last night, the announcement was made thatCity Market’s majority shareholder Trans-Island Traders Limited’s(TITL)intended takeover of AML–through a tender offer of$1.50 to shareholders for 51 percent of the company’s outstanding common stock–would not be allowed to go through at this time.
“In ensuring the equal treatment of all investors and shareholders of the target company, AML, the commission has further determined to suspend trading in the shares of AML, effective as at the close of trading on February 22, 2011 until further notice,”said a statement sent yesterday by the Commission.”The suspension is applied to allow the parties engaged to provide the market with balanced and factual commentary and to ensure that there is at all times a fair and balanced market in AML’s shares.”
If the Securities Commission had approved the transaction, the takeover attempt would have gone into full effect within a matter of weeks. The speed with which TITL could achieve additional market share for City Market was the main appeal of the buyout, said company officials. It’s unclear whether the delay in approval will result in a change of heart by TITL.
“This type of transaction is normally governed by a takeover code or set of rules,”said the release.”There is currently no such takeover code in our current securities legislation, which governs the commission’s regulation of the securities and capital markets.
“Upon the publication of TITL’s intent as noted above, the commission immediately commenced dialogue with both the acquiring company(offeror)and the target company(offeree issuer), with a view to developing an agreed framework to govern any potential transaction following the announcement.”
For now an investigation will also be carried out, said the commission, to assess publicized information as well as other actions taken to date in relation to the current guideline that”no offer to the public to sell or purchase shares can be made unless a prospectus has been registered with the commission,”noted the statement.
The commission is now encouraging the investing public and shareholders to be guided by an outlined process in this or any other bid offer until such time as a takeover code and rules are established.
Chairman of the Securities Commission Philip Stubbs toldGuardian Businessearlier that a timeline for finalizing a takeover code for the proposed transaction was important. However, he did not say if a date was set to have the rules finalized.
Finlayson said earlier that 13 percent of AML’s outstanding shares are already”locked up”and that Trans-Island’s goal was to bring that number to 25 percent. Only 51 percent of the holdings of shareholders that Trans-Island is counting as committed are being counted in the”locked up”number, so if only those shareholders come forward to accept the tender offer, Trans-Island believes it can buy the balance of their holdings and achieve the control it seeks.