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EnergiesNet.com 08 21 2023

President and CEO of Massy Holdings Ltd, Gervase Warner, on Friday night confirmed that the group has completed the acquisition of Industrial Gases Ltd (IGL), the Jamaican distributor of cooking gas and the manufacturer and distributor of industrial and medical gases.

In a brief interview, Warner said the price paid by Massy for IGL is the same US$140.3 million that the board of the Port-of-Spain-headquartered company agreed to on December 19, 2022, when it gave the greenlight for the acquisition.

The purchase of IGL was done by Massy Gas Products Holdings Ltd, a wholly owned subsidiary of the group, which entered into a share purchase agreement with Caribbean Petroleum Marketing Ltd to acquire 100 per cent of the share capital of IGL (St Lucia) IBC Ltd, which owned 100 per cent of the share capital of IGL Ltd.

The seller of the Jamaican company is the Rahaman family from San Fernando, which owns and operates Ramco Industries, the distributor of cooking gas in T&T, as well as Rahamut Service Stations Ltd.

Imtiaz Rahaman, who is the deputy chairman of the Rahamut Group, is listed as being an executive director of IGL Ltd. Apart from Imtiaz, two other members of the Rahaman family sit on the IGL board: Razai Azard Rahaman and Raffia Rahaman. The finance director of the Rahamut group of companies, Patricia Lewis Belasco, is also a director on the eight-member IGL board, according to checks of the company’s website on Friday night.

Massy got regulatory approval to proceed with the acquisition of IGL, even though concerns were raised that combining IGL with Gas Pro, the brand through which Massy distributes cooking gas in Jamaica, could result in the T&T company having a virtual monopoly of the island’s cooking gas market.

There were fears that the combined entity’s market dominance of the cooking gas market could result in the abuse of smaller LPG (Liquid Petroleum Gas) suppliers and consumers.

Addressing those concerns in March this year, the Massy Gas Products CEO in Jamaica, Rohan Ambersley, said the combination of Gas Pro and IGL would account for just over 70 per cent of the total cooking gas market in Jamaica.

In an article published in the Jamaica Observer on March 15, 2023, Ambersley said: “We have assured our customers and by extension, we can assure the nation, that we will continue to operate with the highest standards and provide competitive prices and excellent service to the Jamaican market.

“The LPG industry in Jamaica is one of the industries which has seen an increase in competition in the last three years, with over ten new companies entering the space.

“The market is characterised by robust and increasingly strong competition and will continue to be characterised by vigorous commercial rivalry.

“Massy Gas Products (Jamaica) Ltd, which is fully committed to fair and open competition, will continue to serve its customers and the Jamaican market with great products, exceptional service, and an enduring commitment to safety and reliable supply.”

Ambersley was responding to an article in the Jamaica Observer on March 8, headlined ‘It poses a risk: Concerns raised about Massy acquisition of IGL,’ which reported that the combined entity was set to have up to 90 per cent of the cooking gas market.

On May 17 2023, Massy completed the acquisition of IGL Jamaica after signing a consent agreement with the Jamaica Fair Trading Commission (JFTC).

The commission granted Massy permission to acquire IGL, even though the country’s competition regulator concluded that the purchase “without more, would likely result in a lessening of competition,” in the north Caribbean country’s cooking gas market.

In its July 2023 newsletter, the JFTC said as a result of the concerns it negotiated a consent agreement with Massy to mitigate the anticipated adverse competition effect on the market for LPG.

The JFTC said: “In conducting the assessment, the FTC sought the views of other market participants on their scope for expansion and of commercial customers on whether they will likely be harmed by the acquisition.

“The FTC concluded that the acquisition would result in a dominant supplier of LPG as Massy and IGL are the top two bulk suppliers of LPG island-wide in both the residential and commercial segments of the market.

“Further, there is a significant gap in market share between the combined Massy/IGL and Petcom, which is the third-largest bulk supplier of LPG. There are 12 LPG suppliers, nine of which are recent entrants having entered the market in 2018 or after.

“Through the consent agreement, Massy agreed to implement three measures to mitigate the anticipated adverse effects of the acquisition.

Essentially, Massy has agreed to:

• ↓Limit the scope of the noncompete clause;
  
  
• ↓Offer access to its LPG storage facilities in Montego Bay to other marketing companies under terms comparable to those under which IGL had accessed the facility, and
  
  
• ↓Continue to engage in arrangements for the retrieval and surrender of empty LPG cylinders.”

The JFTC said that based on the conditions set out in the consent agreement, it issued a statement of non-objection to the consummation of the sale and purchase agreement, which will see Massy acquiring 100 per cent control of IGL.

In the interview on Friday night, Warner said he was gratified by the professionalism of the JFTC officials.

The completion of the acquisition of IGL adds to Massy’s gas products portfolio, which was boosted by the purchase of 100 per cent of the share capital of Air Liquide Trinidad and Tobago Ltd, a manufacturer and supplier of the industrial gases oxygen, nitrogen and argon.

Air Liquide T&T was a subsidiary of the French multinational company of the same name. The announced price of that acquisition was between US$51.5 and US$58 million manufacturer.

At Massy’s annual meeting in December last year, a shareholder asked Warner whether Massy intended to pay the shareholders of IGL Ltd in US dollars, but collect Jamaican dollars from the customers of the company, which would make Massy susceptible to changes in the value of the Jamaican dollar.

Warner responded: “Yes…we are paying in US dollars and it does make us susceptible to the changes in the Jamaican exchange rate.

“Now, I would like to remind you that we have operated in Jamaica for many years. We also bought the LPG business that we have in Jamaica for US dollars.

“LPG is a commodity that is US dollar-indexed. So when the exchange rate changes, the price of LPG changes and we are able to reflect that in the prices of the product to consumers.

“Why we are comfortable with doing that is that we have over 15 years of experience in Jamaica running an LPG business very profitably.

“You are right, it does have that exchange rate risk component to it, but we think that is sufficiently mitigated by the nature of the business and our experience in operating exactly the same business, in exactly the same market.”

Massy’s expansion through acquisition in Jamaica was signalled when the company cross-listed its share on the Jamaica Stock Exchange on January 27, 2022.

guadian.co.tt.08 13 2023