JFP Limited (formerly Jamaica Fibreglass Products Limited) has reached an agreement with Trinidad and Tobago-based Total Office (2006) Limited — an office furniture and stationery distribution company — to form a strategic partnership that will see JFP becoming the manufacturing arm for Total Office.
"It is a deal that I think is going to help both companies. It's [JFP Limited] diversifying into the distribution space along with manufacturing and it is about [JFP Limited] diversifying outside of Jamaica into the territories [Total Office] services. So we will now get our manufactured products seen and visible in Barbados, Guyana and Trinidad in a real way, because we will be a part of their company and they will be a part of ours," Metry Seaga, the CEO of JFP Limited, told the Jamaica Observer. His company, JFP, is a contract furniture manufacturing company that produces a wide array of furnishings and equipment for government agencies, restaurants, and the hospitality industry in Jamaica.
Seaga, who called the proposed partnership "a good deal for everybody", especially "the shareholders [who] will benefit significantly at the end of the day," said the arrangement includes both entities taking a 30 per cent stake in each other. That would see Total Office purchasing 336 million shares in JFP Limited for approximately $536 million. With that, Total Office would become the single largest shareholder in JFP, eclipsing Stephen Sirgany's JKZ Limited and Metry Seaga's Eurobian Limited which now own 304,580,000 and 304,720,000 shares, respectively. Both directors own, either directly or through beneficial ownership, approximately 54.4 per cent of JFP Limited and are likely to sell some of their shares to facilitate Total Office's stake.
On Monday a notice on the Jamaica Stock Exchange indicated that a director of JFP Limited sold 87,039,575 shares and connected parties sold 174,340,530 on March 15, 2023. It is not clear if the sales which add up to 261,380,105 shares were sold to Total Office as part of the deal.
The Business Observer could not estimate a likely value for the stake that JFP Limited will take in Total Office since that entity is private.
"After we close this transaction, both companies will be the largest individual shareholders in each other and will have representatives on our respective boards of directors. While the two will remain as separate entities, this signals a bona fide joining of forces that bears substantial possibilities and synergies that will be unearthed in the months and years to come," Seaga said in a release about the partnership. The deal is expected to close in July.
GK Capital has also been appointed as an advisor to Total Office and is in the process of evaluating strategic capital raising opportunities for the company in the Jamaican market. The Business Observer this could include an initial public offering of Total Office Group's shares as early as this year with the company intending to list on the Junior Market of the Jamaica Stock Exchange.
Ryan Strachan, vice-president of investor relations at GK Capital, said discussions continue about how much Total Office will look to raise in the local market, but said "it could be close to the limit." The limit for Junior Market companies is $500 million for now. Total Office sells about US$7 million in stationery and office supplies annually.
"The prospect of our involvement in this partnership surfaced shortly after the oversubscribed JFP IPO in March 2022. As lead broker and arranger of that IPO, GK Capital built on our relationship with JFP to position ourselves as the Total Office Group's financial advisor, following JFP's signing of a Caribbean distribution agreement with them in June 2022," Strachan is quoted as saying in a release on the matter.
Ryan Proudfoot, managing director of Total Office Group ,commented, "Total Office formally established a presence in Jamaica in 2019 when Steelcase Inc appointed us as their exclusive representative in the country. Since that time, JFP emerged as an ideal partner with whom we will pursue growth in the Caribbean and in this beautiful country that has performed appreciably relative to the prevailing economic uncertainty across the globe. While Total Office is regional in scope and focus, we are particularly excited by our relationship with JFP and, by extension, Jamaica."
Total Office Group is a stationery and office equipment supplier with a distribution network spanning 14 Caribbean territories. The partnership between JFP and Total Office will create a regional distribution chain for JFP and a manufacturing arm for Total Office, allowing them to expand their product offerings in the Caribbean region and beyond.
The executive teams of both companies see this as a progressive move and one that will enhance profitability and put the companies on the map as real players in the Caribbean business landscape.
"Total is going to benefit by getting into the manufacturing space of a company that does hospitality furnishing. And they currently don't play in that space so [the deal] is going to give them an opportunity to be able to be in that space from the manufacturing side of things," Seaga indicated.
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