The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

and NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Bahamian wholesale industry has been told that Government approval of Bahamas Food Services (BFS) acquisition by Sysco is “a done deal”, Tribune Business was informed yesterday, although administration sources were adamant that no final decision had been taken.

This newspaper was told that Prime Minister Perry Christie effectively conveyed this message to Bahamian wholesale industry representatives last week, with other companies not present informed by e-mail of the outcome.

The meeting was also attended by Customs Comptroller, Charles Turner, sources said, with the Government asking for the wholesale industry’s assistance in cracking down on revenue leakages.

The head of one Bahamian wholesale company effectively confirmed to Tribune Business that, from all indications, the BFS/Sysco deal would get the green light.

“We have had several meetings with the Government on this matter,” the leading wholesaler said. “I got a clear indication that the Government plans to proceed, that they have no choice but to proceed.

“They really can’t stop it from a policy perspective; it’s one foreign entity selling to another. I understand that they want to approve the deal with certain restrictions; what those restrictions are I don’t know.”

They added: “Do we have concerns? Definitely. This is certainly very concerning for local wholesalers. This will have huge ramifications. Trying to cope with BFS was difficult enough, with Sysco it’s going to be even more difficult.

“They are a very big company with a big reach, but the thing is their money is not going to stay in the country. Our money stays here in the country. That’s something the Government should take into perspective.”

The overriding fear of Bahamian wholesalers is that if the BFS purchase is approved, Sysco, a US-based conglomerate with $37 billion in annual sales, could use its economies of scale and pricing power to undercut them and drive them out of the market, seizing all the business for itself.

Patrick Treco, managing director of Continental Foods, previously told Tribune Business that if a deal between Sysco and BFS were to happen, it could be detrimental to rival Bahamian wholesalers.

“That’s going to undercut the wholesalers because these are people we are already buying from in the United States. If we are sourcing stuff from them, as is now, they could come in and undercut us,” said Mr Treco.

“One of the key issues I have a problem with is the food industry is reserved for Bahamians, so I don’t know how that [a BFS/Sysco deal] is to happen unless they do a share deal where Bahamians buy into the company.”

However, high-level government sources spoken to by Tribune Business yesterday said that while the approval process for the BFS/Sysco deal was “moving forward” - indicating it was likely to be approved - no final decision had been taken.

“I think we’re moving forward,” one source said. “We still have another meeting to make some concrete decisions. All of the research that has been done indicates there is no major cause for concern.”

Of Mr Turner’s presence at last week’s meeting, the source added: “There was a request for the industry as a whole to ensure there isn’t any revenue leakage again.”

Tribune Business exclusively revealed the BFS/Sysco acquisition plans earlier this year.

Sysco had initially expressed interest in BFS back in 2004-2005. The initial deal, which was mulled under the first Christie administration, never came to fruition, partly because the Government was reluctant to grant approval for it in an industry supposedly reserved for 100 per cent Bahamian ownership only.

But Phil Lightbourne, head of Phil’s Food Services, has backed any takeover by Sysco, a New York Stock Exchange (NYSE) listed company.

He said it would benefit both Bahamian consumers and small food retailers. Suggesting that only BFS, with the backing of someone like Sysco, would be able to meet the demands of both Atlantis and Baha Mar when the latter opened, Mr Lightbourne said Sysco’s product offering and purchasing power would reduce prices in the Bahamas.

And he added that Sysco was also prepared to offer Bahamians shares via a Bahamian Depository Receipt (BDR) offering.

Others have suggested that the Government must ensure a minimum 25 per cent equity stake in BFS is sold to the Bahamian public if it approves the company’s purchase by Sysco.