Susan Gordon, Business Reporter

President and CEO of Bank of Nova Scotia Jamaica Limited William Clarke is flanked by bank officers David Noel, senior vice-president and legal counsel, and Stacie-Ann Wright, executive vice-president and chief financial officer, November 23, during a press briefing on Scotiabank Jamaica's year-end results, at Scotiabank Centre, Duke and Port Royal streets, Kingston. - Winston Sill/Freelance Photographer

Dehring Bunting and Golding stock leapt to an all-time high of $24 before settling down at $23 as news emerged that Bank of Nova Scotia Jamaica (BNSJ) was ten points shy of its 75 per cent minimum takeover target.

Yesterday, BNSJ told Wednesday Business it would settle for the 65 per cent take up Monday - 25 per cent more than it acquired under lock-up agreements with DB&G directors and associated shareholders in October 18 - if none of the investment bank's remaining shareholders felt compelled to sell during the extended two-week offer period to December 11.

"We've got over 65 per cent of the shares tendered by shareholders and even though we haven't received the 75 per cent and more, we are still happy," Anya Shnoor, head of BNS Wealth Management Unit, told Wednesday Business.

DB&G executive chairman Peter Bunting was similarly pleased, but perhaps more so that BNSJ was pressing ahead with the takeover.

Pleased with transaction

"I'm very happy the transaction was successful," said Bunting in a reaction late Tuesday.

"Though it was marginally below, its within 10 per cent of their target."

Bunting told Wednesday Business, however, that up to 5:00 p.m. Monday, the take-up was about three points above the 65 per cent that BNSJ estimates that it had successfully acquired.

At the offer price of $21.08, BNSJ would have paid approximately $4.2 billion for the two thirds of the company it now holds, or $4.4 billion if the take-up was 68 per cent, as otherwise suggested.

No adjustment

Executive chairman, Peter Bunting, would have got $905.47 million of the amount; Mark Golding $609.8 million and president Gary Sinclair through his company, Platoon Limited, would have got $284.96 million.

Given the gains made by the DB&G stock yesterday, it seems uncertain that shareholders will feel compelled to take up the offer made at $21.08 cents per share, which BNSJ has already declared it would not adjust.

Prior to the offer, the stock's highest trade was $21.27 in September.

BNSJ advised the Jamaica Stock Exchange Monday that it would proceed with the acquisition. Market analysts were not surprised at the outcome of the offer.

"It was always a touch and go situation," said Neilson Rose, equity trader at FirstGlobal.

He said based on the initial behaviour in the market, some investors thought the $21.08 offer by BNS was too low based on the potential value shareholders expect will from the synergy between the two companies once the investment bank is taken into the BNS fold.

The current management team will continue to run DB&G at least for two years Ñ Peter Bunting as CEO at an annual salary of $7 million and a 3.0 per cent profit share bonus linked to annual core earnings; Garfield Sinclair as chief operating officer at a $6 million salary and 1.8 per cent share of profits, and Mark Golding as legal advisor on monthly retainer of $120,000 (plus GCT) and 1.2 share of profits.

In fact, Rose predicts that shareholders will continue to hold until the synergies between the two companies begin to push up the stock price.

Schnoor said she was hoping the acquisition of DB&G would strengthen Scotia's market share and add another three to four per cent to the earnings of her wealth management unit, and for the unit to contribute at least a fifth of BNS group's profits.

"I'd be happy for us to get up to 20 per profit and we can grow from there and even higher," she said.

Right now, the contribution of the unit, which includes insurance and private banking, represent 16-17 per cent of the BNS profits.

BNS has said that DB&G, which has a 23,000 customer base, will continue to operate under its brand, but Schnoor has indicated that her unit and the investment bank staff will operate from one location.

The bank has acquired property at Constant Spring Road in Kingston for a new branch and headquarters for its wealth arm.

Schnoor said the bank was targeting the first quarter of 2007 to complete the two-storey structure.

"We are in the process of designing the building," she said, but would not comment on the development cost.

susan.smith@gleanerjm.com