Caribbean Flavours and Fragrances questions Derrimon Trading on share buy

BY AVIA COLLINDER Business reporter collindera@jamaicaobserver.com

Thursday, January 05, 2017

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On behalf of its minority shareholders, the board of Caribbean Flavours and Fragrances (CFF) Ltd has said it is seeking confirmation from Derrimon Trading Ltd (DTL) of its intentions towards these shareholders and is also seeking more information on the recent purchase of additional CFF shares by DTL.


On December 23, 2016, DTL indicated via the Jamaica Stock Exchange (JSE) that it had begun a process to acquire an additional 23,379,208 stock units in CFF.


That amounts to another 26 per cent of the company. Derrimon previously, in 2014, acquired a 49 per cent stake in CFF, which is a sister company on the JSE’s junior market. The new block of shares will push ownership by Derrimon to some 75 per cent of 89,920,033 shares outstanding.


The sum prepaid by Derrimon for the new block was $105.21 million, translating to a price of $4.50 per stock unit.


The notice posted via the JSE by CFF on Wednesday said, "Caribbean Flavours & Fragrances Ltd (CFF) has advised that it is seeking confirmation from Derrimon Trading Company Ltd (DTL) regarding: (a) the status and nature of DTL’s acquisition of 23,379,208 CFF shares, and (b) DTL’s intention towards other shareholders of CFF. CFF has also advised that a further announcement will be made as soon as a suitable response has been received from DTL."


Derrimon had indicated in December that it was in discussions with the Financial Services Commission (FSC) as to the implementation of such follow-up actions that may be required by applicable laws or regulations.


Under the Securities Act 1993, a mandatory takeover offer is triggered at over 50 per cent acquisition.


Once ownership hits that threshold, the holder of the shares is required to make an offer to purchase all other outstanding shares held by minority owners.


CFF Managing Director Derrick Cotterell, who is also chairman and CEO of Derrimon, told the Jamaica Observer during the festive period that the purchase of shares was made in response to an offer from company founder Anand James. "Mr James wanted to sell to us, so we struck a deal," he explained.


Cotterell said that he expected that an offer will be made to minority shareholders in Jamaica at the same price.


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