RADIO Jamaica Limited (RJL) and 1834 Investments jointly announced on Friday that RJL will be acquiring all of the shares of 1834 by way of a Scheme of Arrangement to be approved by the Supreme Court of Jamaica and both company’s shareholders.

According to the release, significant 1834 shareholders have indicated their support for the amalgamation. The top ten shareholders for 1834 control 64.99 per cent of the issued shares.

Under the arrangement, 1834 shareholders can receive 0.403125 RJR shares for every 1834 share offered, $1.29 in cash per 1834 share offered, or a combination of both cash and RJL shares. This would mean an 1834 investor offering 100 shares would receive about 40 shares, $129, or a mix depending on how they offer shares in the transaction. Thereafter, 1834 would be amalgamated into RJR and be dissolved on conclusion.

1834 Investments was the resulting entity after the Gleaner Company Limited (GCL) shifted its media assets and operations into The Gleaner Company (Media) Limited, which merged with RJL in March 2016. At the time, GCL shareholders received one RJL share for every GCL share they held at the record date. The transaction resulted in RJL having a $2.77-billion asset base while 1834 became a $2.17-billion entity focused on management of real estate and investments. RJL had a 3-to-1 stock split and a bonus issue at the time which pushed its outstanding ordinary share count to 2.42 billion shares.

The offer price for this current transaction would be a 4.30 per cent premium on 1834’s book value of $1.24 at the end of December, and a 51.76 per cent premium to the closing price of $0.85 on Friday. The transaction is valued at $1.56 billion based on the 1.21 billion shares of 1834 in circulation and would see 488,282,668 shares of RJL being issued if 1834 shareholders choose to receive RJL shares as payment.

RJL received approval from its shareholders, at its 2020 annual general meeting, to increase its authorised share capital by half to 3.63 billion ordinary shares. The transaction would push the issued share count to 2.91 billion ordinary shares and leave the group with possibly 722.96 million shares it could issue in a potential equity raise for its expansion of its media business.

The special 1834 committee comprised Clair Monica Ladd, Executive Director Terry Peyrefitte, and former Director Morin Seymour, while the special RJL committee included Chair Carl Domville, Chief Financial Officer Andrea Messam, executive directors Gary Allen and Christopher Barnes. Ernst and Young was the independent financial consultant to the fair value determination of the offer price.

RJL’s stock price has declined by 17 per cent year to date to $2.54, after disappointing Christmas results. The company’s market capitalisation stands at $6.15 billion while 1834’s market capitalisation was $1.03 billion. Also to be noted is that 1834 had a nine-month net loss of $18.53 million while RJL had a net profit of $245.58 million. Both companies’ financial year ended on March 31 and are currently being audited.