Finlayson: AML bid is off the table
Trans-Island Traders’announced plan to take control of AML Foods is off the table, but a turf war between City Market and Solomon’s Super Centers is on the horizon.
The board of Associated Bahamian Distillers and Brewers Ltd.(ABDAB)came out of Thursday’s board meeting excited about a proposal to get Trans-Island Traders’78 percent ownership of City Market parent Bahamas Supermarkets Limited(BSL), but strongly opposed to having any part in the acquisition of AML Foods. The news came from Trans-Island Traders President Mark Finlayson, who spoke toGuardian Businesson Saturday and explained the board’s position on the AML acquisition.
“Their reasoning was very straight forward,”Finlayson said.”They appreciate the fact that the$1.50 bid was made on prior information but given the fact that after January 31 a report of their latest numbers showed AML profits were down 64 percent, they felt very strongly that$1.50 was much too much at this stage.”
The bid Finlayson referred to was announced on January 31, for a 51 percent ownership stake in AML at$1.50 per share. Praising the wisdom of the ABDAB board, Finlayson, who has always maintained that it was important to Trans-Island that ABDAB’s shareholders were’on board’deferred to their decision on the proposed AML takeover.
“As a result you will see that on Monday we are going to withdraw our Trans-Island Traders proposal to buy 51 percent of AML,”he said.
But the ABDAB board was keenly interested in the chance to add the majority ownership of BSL to their portfolio, according to Finlayson. He had proposed that Trans-Island sell its BSL majority stake to ABDAB, with that company providing additional shares as consideration. Finlayson and his father Sir Garet’Tiger’Finlayson own 100 percent of Trans-Island and their family owns 70 percent of ABDAB.
For Finlayson and his family,”It’s six of these, half a dozen of the next,”he said, but the proposal would allow for ABDAB to participate in City Market’s future cash flow and profit potential. Despite being in various active businesses in the past, ABDAB is now essentially a real estate holding company, sitting on some valuable properties.
Finlayson said that over the next two weeks formal independent valuations of both BSL and ABDAB will be conducted by two independent financial companies CFAL and Royal Fidelity.
“We have to be careful, regardless as to who owns 70 percent of ABDAB, that there’s a proper independent valuation on both sets of shares,”Finlayson said. After the valuations, Finlayson said that it was unlikely another board meeting would be held on the matter, but the findings would be circulated’round-robbin’for a board decision on the exchange.
The ABDAB board has also green-lighted plans to use three of their property holdings as sites for City Market super centers, two in Nassau and one in Freeport. The Freeport location and one of the Nassau locations are in such close proximity to stores owned by AML that a turf battle between the retailers is likely inevitable.
“Ultimately, I don’t think the two can survive,”Finlayson said of his expectations of the City Market and AML stores that would be pitted against each other.”But look at the make-up of the[ABDAB]board. They are fighters.”
In a previous interview City Market’s Chief Financial Officer Philip Kemp told this newspaper the three stores would cost the food chain around$3-$5 million each. ABDAB, he said, would have to bring the locations up to the’box’needed for City Market to move in and do its part. The locations are at the former Burns House location on John F. Kennedy Drive, on the corners of the East-West Highway and Abundant Life Road, and in Freeport on the Queen’s Highway. Coming out of the board meeting, ABDAB gave Finlayson the directive to start putting money into the renovation of those buildings.
The ABDAB board gave Finlayson another task, Kemp said, noting that he has been charged with finding other opportunities. He acknowledged that he has already been in discussions with Phil’s and Robin Hood, two relative newcomers to Nassau’s food retail sector. In regard to finding other opportunities, Finlayson said those food stores are not necessarily the’next step’, but that he will be pursuing further discussions with them.