A uto battery maker Tropical Battery has entered into discussions with two companies on possibly merging its operation, or broadening the business through acquisition.
Vice-President for Sales and Marketing Daniel Melville said the company is now in the early stage of talks, but is looking towards a deal during year 2021.
“We have two companies that we are speaking to, one in Jamaica and the other somewhere else in the Caribbean, that are interested in merger or acquisition. We don’t know what that looks like yet; it’s just to reach out to see how everybody is feeling,” said Melville.
“We are looking at any company that is vertically or horizontally aligned with us. Vertically would be companies that are in the solar, energy storage or electric vehicle-charging business, and we are also looking at companies that are in the traditional battery, tyre and accessories business, or a company that is in the automotive space and not just cars,” Melville said.
Fresh off its initial public offering, IPO, and listing on the Jamaica Stock Exchange in October, Tropical Battery Company Limited raised around $300 million to invest in the expansion of its product lines and upgrades to its network of stores. The new M&A plans under consideration by the company could be added to the list, but is not the company’s preference.
“Cash from the IPO is an option, but ideally we would like to use shares as part of the process for the acquisition. Maybe some cash and shares,” Melville said.
In its first financial report since listing, Tropical Battery recorded net profit of $72.7 million on revenue of $1.8 billion for year ending September. Assets of the company remained flat at $1.3 billion, but its capital base expanded 42 per cent to $776 million, mainly due to increases in retained earnings and cash received from the initial public offering.
“Since we have listed, a number of opportunities have come up which we were not really looking for. But if it means growth for Tropical Battery, it’s something that we are willing to look at,” Melville said.
