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Seprod going regional with AS Bryden acquisition

Published:Friday | May 6, 2022 | 12:07 AM
Richard Pandohie, CEO of Seprod Limited.
Richard Pandohie, CEO of Seprod Limited.

Seprod Limited has taken its first step towards becoming a regional company in a deal to acquire distribution company A.S. Bryden...

Seprod Limited has taken its first step towards becoming a regional company in a deal to acquire distribution company A.S. Bryden & Sons Holdings of Trinidad & Tobago that will almost double its sales revenue.

It’s Seprod’s first acquisition outside Jamaica. It will own 65 per cent of the consumer goods distributor, while the other 35 per cent will continue to be held by several shareholders, including the company that holds the largest block of shares in Seprod, Musson Group.

The value of the transaction, which is due to close at month end, will be disclosed in subsequent earnings reports sometime this year, Seprod CEO Richard Pandohie indicated.

The combined operations will have revenues of more than US$500 million, he said.

For Seprod, the Caribbean markets within the 15-member Caricom trade bloc are viewed as a single domestic space in which it does business.

“We don’t see this as acquiring a business in Trinidad just for the sake of having it. This is a regional move; one that we’ve always been articulating,” Pandohie said in an interview with the Financial Gleaner. “For us, Caricom is a domestic market.”

Seprod is an 82-year-old company engaged in the manufacture of food and industrial products, as well as distribution of multiple brands, including its own as well as those owned by third parties. Its shares have traded publicly on the Jamaica Stock Exchange since 1986.

A.S. Bryden originated in Barbados in 1898, founded by Arthur Sidney Bryden, while the Trinidad operation launched in 1923 under William Francis Bryden, Arthur’s son.

It suits Caribbean companies to do business within the Caricom bloc because of the preferential treatment afforded them, via tariff protections, for example. But the flow of trade has not always been filled with comity, evidenced by disputes over certain products over time and fights over the Common External Tariff. One of the most recent disputes is over the soap made by a Jamaican manufacturer as to whether it qualifies for preferential access to Caricom markets.

Most of Jamaica’s goods are still traded with the United States, with limited exports to Caricom. However, in recent years, Jamaican companies have become more bullish about regional business and market prospects, including the openings for trade that pandemic and war-induced disruptions to global supply chains have sparked.

“We believe that the region has big opportunities for all of us. If you look at the regional make-up and the things we import, there is a lot of value lost in just the inefficiency of the regional distribution system,” Pandohie opined.

The acquisition of A.S. Bryden awaits regulatory approvals, but is expected to be completed by May 31.

Regarding the value of the transaction, Pandohie said only that it would eventually be disclosed, as Seprod is a listed company.

“On the revenue side, at present Seprod is about US$290 million per year, while ASB is about US$230-US$240 million per year. That puts us beyond US$500 million,” he said. “The point is, the transaction represents a substantial leap in size.”

A.S Bryden & Sons and its subsidiaries are all privately held T&T registered companies. Its principals include the Brydens and Alan Fitzwilliam.

Pandohie says Seprod is acquiring shares held by Alan Fitzwilliam and Ian Fitzwilliam, and Michael Bryden.

A.S. Bryden will continue to operate as an independent, stand-alone company, and its subsidiaries, A.S. Bryden & Sons (Trinidad) Limited, Bryden pi Limited, and F.T. Farfan Limited, will continue to be managed by their existing executive teams.

Pandohie will continue as CEO of Seprod and will also serve as interim Group CEO of A.S. Bryden.

“Right now, the effort is around that matter of integration. That will be my job for the next six months. We want to give assurances all around, and that includes the staff, who are a very important element,” he said.

The two companies have a combined workforce of around 3,000. No job cuts are expected. Pandohie says any changes for now will be focussed on growing the business and taking advantage of synergies, rather than cost-cutting.

He notes that in addition to the two largest markets in the region, Jamaica and Trinidad, the merged entity will also have interests in Barbados, Guyana and Grenada.

Both companies already represent several brands in common, such as Eve, Kraft, Mondelez and Pfizer.

The distribution hub that Seprod has recently developed at its Felix Fox complex in Kingston is being considered for reorientation as a regional hub.

“It could easily be, since what we’re doing is a regional move. It is entirely possible to, for example, take containers into the SEZ, break them up into smaller bulk for shipping into other islands. Looking at the region as one market then, the synergies are obvious,” Pandohie said.

“I think we’ve found value. I wouldn’t go as far as to say the mother lode, but as CEO I cannot contain my excitement. This is amazing value, and a company with a big reputation,” said Pandohie, who has been Seprod’s boss for over seven years.

Pandohie has not said what Seprod’s future M&A activity is expected to look like, but it seems clear that the company is still looking for prospects or willing to entertain offers. Pandohie said that since the announcement of the A.S. Bryden transaction on Wednesday, he personally has received at least five serious messages with entreaties for acquisition deals.

Seprod’s last big M&A deal prior to the Bryden transaction was the purchase of Facey Consumer from a member of the Musson Group.

neville.graham@gleanerjm.com