The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

PRIME Minister Perry Christie yesterday confirmed that the Government had decided to approve Bahamas Food Services’ (BFS) takeover by multi-bilion US giant, Sysco, promising his administration would ensure that Bahamian wholesalers were not “unduly impacted” by the sale.

Speaking with Tribune Business following a Cabinet meeting yesterday, Mr Christie, while not divulging much on the matter, said the Government had reached a decision. This effectively confirmed what had been reported in this newspaper last week; that the Bahamian wholesale industry had been told that the acquisition of BFS was a “done deal”

“A decision has been made on that,” the Prime Minister said. “I was involved in the discussion with the local wholesalers, and I made it abundantly clear to them - and they understood - that it was not a decision I could delay for any period of time.

“When a business is owned by a foreigner and that business is set up to be sold to another foreigner, there have to be compelling reasons that you would even consider blocking it.”  

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.

Yesterday, Mr Christie said the Government would work to ensure that Bahamian wholesalers were not “unduly impacted”.

“What I wanted to reassure the Bahamian wholesalers of is that the Government, as a regulator, would work to ensure that their businesses were not unduly impacted by any sale. In so far as the Government is concerned, that decision has been made,” said Mr Christie.

The decision will likely pave the way for some kind of share offering to the Bahamian public, whether it be a Sysco Bahamian Depository Receipt (BDR) or the Commonwealth Brewery model, where 25 per cent of the equity was sold via an initial public offering (IPO).

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.

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.

The head of one Bahamian wholesaler, speaking to Tribune Business last week, confirmed the industry’s concerns over the BFS/Sysco tie-up.

They said: “We have had several meetings with the Government on this matter. 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.”