It appears that Seprod Limited might be on the cusp of another major deal as the company prepares to ask its shareholders to approve two resolutions for its November 27 extraordinary general meeting (EGM).

An EGM notice was published in both national newspapers yesterday, where shareholders will be asked to approve two resolution items for the virtual meeting to take place at 11 am. The first item seeks to amend article 75 of Seprod’s articles of association to allow for a maximum of 14 directors but not less than three directors. Seprod’s currently has 12 directors with Ron Schindler being the last director to join the board in December 2022. The board is chaired by Paul B Scott who is the chairman, chief executive officer and principal shareholder of Musson (Jamaica) Limited.

The second resolution item is seeking to allow any notice by Seprod to be given to any shareholder by posting on the company’s website and/or on the Jamaica Stock Exchange’s (JSE) website. This item is effectively seeking to digitise part of the process to disburse relevant notices to shareholders, reduce costs, improve speed and reach through electronic means.

While these resolution items don’t appear to give any indications of directions to be taken by the company, it occurs as the latest sequence of moves taken by Seprod over the last year to prepare for new deals.

Seprod shareholders approved a resolution at the company’s September 2023 annual general meeting (AGM) to increase the company’s authorised capital from 780 million ordinary shares to one billion ordinary shares through the creation of an additional 220 million ordinary shares, which can be converted to stock units and listed on the JSE. Seprod’s issued share capital is currently 733,546,855 ordinary shares.

“What we want to do is to look at the options with regard to our capital structure and have the options to do it. We can either raise money if we choose to raise money, we can do a number of different things, but we tend to have one AGM per year. We have a lot of different plans for the next 12 months and optionality is often disregarded from value. So, we value having optionality and we’re having the AGM today and that is the reason,” PB Scott said at Seprod’s 83rd AGM.

That AGM was proceeded by Musson (Jamaica) purchasing 1,630 ordinary shares of Sperod in January 2024 to bring Musson and its associates collective holding to 366,773,661 ordinary shares or 50 per cent of Seprod’ ownership. A takeover bid was launched by Musson Investments Limited to acquire 13,948,000 ordinary shares at $78 per share in that same month, but the only block transfer of shares on February 27 on the JSE Main Market was for 737,724 shares while Musson Investments’ stake remaining unchanged.

Although Seprod can take the route of raising cash by issuing new shares to fund a potential acquisition, the company can also issue shares and cash like the March 2018 deal with Facey Group Limited, where cash and new Seprod shares were used to settle the acquisition of Facey Commodity Holdings Limited. Thus, an issuance of shares to the seller of a business could feed into the strategic plan by Seprod to reach US$1 billion in revenue by 2026.

These moves by Seprod to increase its board size after increasing its authorised share capital mirror the proposed resolutions to be discussed today at General Accident Insurance Company Jamaica Limited (Genac) AGM to be held today at 9 am. Genac has proposed to increase its board size, increase its authorised share capital for its ordinary shares and creating redeemable preference shares.

Seprod has been on an expansive acquisition route over the last six years with the acquisition of AS Bryden & Sons Holdings Limited (ABSH) in June 2022 springboarding its regional growth prospects. ASBH acquired 44.9 per cent of Caribbean Producers (Jamaica) Limited (CPJ) on July 9 for more than $5.17 billion.

CPJ (St Lucia) Limited recently made some management changes that took effect last Friday with CPJ acquiring the rights to distribute part of the Moët Hennessy brands and Vybz Kartel’s liquor brand.

ASBH itself also acquired the remaining 10 per cent in Bryden pi Limited from founder Norman Tang in the first quarter (January to March) while acquiring a 55 per cent stake in Retail Acquisition Company Limited, the parent company of Stansfeld Scott (Barbados) Limited. ASBH’s subsidiary Facey Trading SVG Limited also began distributing Genethics, Jamieson and Apotex in St Vincent and the Grenadines last quarter after receiving a pharmaceutical certificate of registration.

ASBH is currently working on completing its regional distribution centre at eTeck Industrial Park, Factory Road, Chaguanas, Trinidad & Tobago at a cost of at least US$29 million. This logistics hub should be completed by December 2025 and further support its distribution plans across the region. The eTeck Industrial Park will also support manufacturing capacities by different businesses in a country with one of the cheapest energy costs in the Caribbean.

Seprod’s six months consolidated results were up seven per cent to $58.33 billion, but consolidated net profit was down 16 per cent to $2.15 billion due to higher costs at AS Bryden level.

Total assets closed June at $105.26 billion with current assets rising to $57.71 billion with cash at $6.92 billion. Total liabilities and equity attributable to shareholders were $63.97 billion and $29.50 billion, respectively.

Seprod’s stock price closed Tuesday at $84.21, which leaves it up six per cent in 2024 with a market capitalisation of $61.77 billion. Seprod, AS Bryden and CPJ’s quarterly reports are all due by next Thursday.