At the same time Jamaica Money Market Brokers (JMMB) celebrates the pending aquisition of Capital and Credit Financial Group (CCFG), it is being forced to quell shareholder fear of a hostile takeover by National Commercial Bank (NCB).

As news broke last month that JMMB was set to acquire CCFG, NCB Capital Markets became the largest single shareholder in JMMB by purchasing a 29 per cent stake in the financial institution.

NCB indicated at the time that the investment is in line with its wealth management arm’s investment management strategy of taking positions in liquid financial assets and does not represent a move to take control of or acquire a majority stake in JMMB. But, as was highlighted at JMMB’s Annual General Meeting (AGM) on Wednesday, some shareholders remain uneasy about NCB’s motives.

“In my mind an earthquake shook on Trafalgar Road, the epicentre of which was Haughton Avenue; we have now become an associate of NCB,” said shareholder Orette Staple at the AGM, held at the Jamaica Pegasus Hotel in Kingston.

“God forbid, if there was to be another tremor, Mr Chairman, NCB only needs 22 per cent more to have total control. What is this company putting in place to prevent such a takeover, and if such a takeover should happen, how are we as shareholders protected by this company? I am very concerned and I’m sure other shareholders sitting here are concerned,” added the pensioner to thunderous applause from the audience.

JMMB managing director Keith Duncan in response noted that the company received a letter from NCB stating that it has no interest of taking control of JMMB. What’s more, he said, the majority of JMMB’s top shareholders would have no interest in selling.

“If you look at the top 20 list of shareholders, one could see that there is a significant number of shares held in friendly hands who have no intention of selling out their interests to that kind of level,” said Duncan, adding “There is also the employee share ownership plan and therefore there is a level of control based on the number of shares in friendly hands in relation to existing shareholders.”

A dissatisfied Staple interjected: “But if there are motives and the price is right, that love affair that you’re talking about can change.”

While Duncan respected Staple’s opinion, telling him “that’s your view”, he told shareholders that all is safe from a managment perspective and outlined the fact that Trinidadian firm CLICO formerly owned 40 per cent of JMMB.

“It didn’t affect us then and it’s not affecting us now,” said the JMMB boss.

Meanwhile, Duncan painted a very positive picture for the company going forward, bolstered by the CCFG acquisition — subject to regulatory approval — which is expected to enable JMMB to expand its suite of products and services. Indeed, provided that the acquisition is completed, JMMB would get a merchant banking and unit trust license in the deal.

“Our client base would be able to buy banking services and unit trusts, which are important in building out JMMB’s strategic plans going forward,” Duncan noted.

He added that the potential acquisition would deliver stronger financial performance, bringing with it increased efficiencies through the consolidation of services and extraction of synergies in products, technology platforms and operations.

JMMB has made an offer to acquire up to 100 per cent of the issued share capital of CCFG at a price of $4.55 per share. The total cost of the transaction is $4.22 billion. While the transaction would see the share dilution of 10.29 per cent for JMMB shareholders, it would also generate for them an immediate increase of 18.33 per cent in book value.

JMMB reported robust first-quarter profits of $950.6 million for the period ending June 30, 2011, increasing by 437.5 per cent over the corresponding period last year. This was boosted by a 50.6 per cent increase in net income to $725.4 million and a 375.4 per cent rise in other operating revenues, namely gains on securities trading.