Friday’s purchase by John Keells Holdings (JKH) of stakes held by the Carsons Group in Ceylon Cold Stores (CCS) and Union Assurance PLC (UAL) has been described by analysts as a ‘pointless’ exercise.
Analysts said while it makes sense for Carsons to sell, it doesn’t make sense for JKH to buy these shares. JKH bought 37 % of UAL, 20.2% of CCS and also 10.9% of John Keells PLC (JKL) for a total worth of Rs 1.59 billion. These acquisitions saw JKH's shareholding rise to over 70 % in all three companies.
“When you have majority control, there is no point in buying more shares. Some main shareholders are not happy about this sale. It is very silly for them to do this,” one analyst said.
Another analyst agreed saying that when JKH has more than 50% in CCS and 36% in UAL that there is really no point in buying further into these companies. “They obviously do not see better opportunities," he added.
A JKH official, who did not wish to be named, said they have been managing these firms and put in a lot of time effort and management. “We expect both these business to do well in the future and want a bigger share of the pie.”
Carsons Director Mano Selvanathan said the company felt these two investments were ‘mature’ enough to be sold. "That is the reason to sell them to the large shareholder," he explained.
When asked why Carsons decided to sell out when the future seems bright with the war coming to an end, he said, "Someone can say that Carsons could have doubled the income in 20 years time (if this sale happened) but that is a decision we took. I am not saying this argument is not true, but this was the decision we took. We also have to look at other investments."