PORT OF SPAIN, Trinidad (CMC) — Shareholders of the Trinidad Cement Limited (TCL) are being urged to reject an offer by the Mexican-based cement giant, CEMEX, to take over the company.

Earlier this month, CEMEX announced plans to take over the TCL, reviving moves of a takeover more than a decade ago.

But in a circular issued Friday, the TCL board of directors has recommended that shareholders reject the TT$4.50 (One Tt dollar =US$0.16 cents) per share takeover bid, noting that the offer price does not reflect the “full commercial value of TCL”.

The board argued that the shares of the company have a greater value than the offer price of TT$4.50, which it said was “not fair, from a financial point of view, to the shareholders”.

While the board did not say what a fair price would be, it however, advised shareholders that TCL is poised to benefit from the significant operational improvements instituted in August 2014.

“The company has experienced a turnaround after multiple past efforts to do so. The evidence of the turnaround is supported by the company’s return to sustainable profitability in 2015 and continuing to produce positive net income throughout 2016.

“The board has embarked on a number of operational and corporate restructuring initiatives that continue to generate positive value for the company.”

Last week, former TCL chief executive officer, Dr Rollin Bertrand accused the Mexican-based cement giant of engineering a takeover of the local cement manufacturer since 2014.

CEMEX, through one of its indirect subsidiaries Sierra Trading, said it is seeking to acquire 132,616,942 shares at a price of TT$4.50 (US$0.72) in cash per TCL share.

CEMEX currently owns 39.5 per cent of TCL, which announced at the end of October that its revenue had declined by 12.2 per cent for the first nine months of 2016.

But Bertrand in a letter published in the media here, noted that in 2002, CEMEX “came with a ridiculous offer of US$0.92 per share” for TCL, which was rejected.

Bertrand, who was removed from his post in August 2014, said the current board of directors must engage a “reputable investment banking firm to value TCL’s shares and then make a recommendation as to whether to accept or reject CEMEX’s offer.

“Unfortunately, the board cannot rely on management’s assessment of CEMEX’s takeover price as it has placed CEMEX managers in all critical positions,” Bertrand said, adding “conflicts of interest with CEMEX directors will have to be carefully managed.

In the circular this week, the board of directors referred to a valuation analysis of TCL’s shares done by PricewaterhouseCooper (PwC) in January 2015 ahead of a proposed rights issue in March of that year. The PwC analysis, which took into account the TCL’s discounted cash flow, earnings before income tax depreciation and amortisation (EBITDA), net asset value, market history and considerations and the trading history, placed the share value between a low of $3.30 and a high of $3.80.

The TCL directors also pointed out that CEMEX is only offering to acquire up to 74.9 per cent of the issued shares of the company. One condition of the bid is that any shares in excess of that limit will be taken and paid for on a pro rata basis.

“In those circumstances, the remaining 25.1 per cent shareholders may find that their shareholding has been depleted, and the board needs to consider the future of the company as it relates to the significant number of minority shareholders who will remain with a depleted minority shareholding,” the board said.