The M&A Dating Game II: This Tourism, Energy and Manufacturing Territory

The second article in our 'M&A Dating Game' series of M&A opportunities is about an island country that has not had an announced M&A event in 20 years.


21 May 2014

M&A Dating Game - Merger and Acquisition opportunities

This is the second article in a series of articles about countries that have not had an announced M&A event in the past 20 years. In my opinion, there’s so much that these countries have to offer - it’s a shame that they’re being left out. Therefore, I have decided to take it upon myself to drum up some business for them.

Last time I left you with this hint: “Next time, we’ll be covering the island country where Elton John, Pink Floyd, Rolling Stones and Rush recorded some of their albums.” Did you guess it yet? I admit, it was a hard hint, so just for fun, I’ll start off with a few more easier ones to see if you can narrow it down.

  1. It’s a British Overseas Territory located in the Caribbean
  2. It’s part of the island chain called the Leeward Islands
  3. Over 50% of the country is designated as an “Exclusion Zone” where only scientists and authorized personnel can enter

Still stumped? Thought so.

Today’s country is….

Montserrat

The Facts

Montserrat is an island territory about half the size of Washington D.C., and located southeast of Puerto Rico. It was a relatively popular Caribbean location with a strong tourism economy. It even housed George Martin’s AIR Studio, a state of the art studio opened by The Beatles’ producer where many famous bands recorded albums in the 70’s and 80’s.

Unfortunately, luck was not on Montserrat’s side – a huge hurricane in 1989 followed by a devastating volcano eruption in 1995 effectively destroyed half the island (hence the exclusion zone) as well as its economy. Following the volcanic eruption, over 50% of its residents left the island and many have yet to return.

BBC_risk_map_montserrat

Source: BBC, Environmental Hazards

Why you should buy right now

I think that based on the natural disasters in the past, it’s virtually guaranteed that whatever investment you make will be at a low point (whether it will rise is another story). The upside here is that the volcanic activity doesn’t affect the northern half of the island, so you have something to work with. Additionally, the local population is hard working and relatively well educated – the literacy rate stands at 97% and unemployment stands at a lowly 6%.

Now, let’s talk about what Montserrat has to offer in terms of investment potential. First and foremost is tourism – the island has a great climate and is located near the Virgin Islands, St. Kitts and Nevis, and Antigua and Barbuda, making it a perfect island hopping destination (if only there was a hospitality industry). You can also appeal to the thrill seeking population – with some negotiations it might be possible to take group tours in the exclusion zone, making it a one-of-a-kind location not only in the Caribbean, but on the planet.

I can also suggest two more investment ideas here: energy and manufacturing. Although Montserrat has no oil or gas to offer, with all of the ongoing volcanic activity, it might be a great location for alternative geothermal energy. You would obviously have to find other countries that you can export to, but you heard the idea here first! Secondly, manufacturing may be a viable option. Currently, Montserrat produces rum for domestic consumption. Caribbean rums (and alcohol in general) are extremely popular products – “the U.S. beverage alcohol industry was worth $400 BN in total US economic activity in 2010 alone.” Capturing just .5% of the US market alone can net a cool $2BN each year – making an investment in Montserrat a potentially worthwhile one.

For the next installment of ‘The M&A Dating Game,’ we’ll cover an island nation that’s been averaging just about 2 coup d’état’s a year since 1975, with the latest occurring in the early 2000s (yes, I know this isn’t a strong selling point already…). In any case, take a guess below if you think you know which country I’m referring to!



Ronen Cohen

Ronen Cohen

Ronen is a Senior Associate in Strategy and Product Marketing at Intralinks where he helps shape the direction and marketing of Intralinks Dealspace and DealNexus for the M&A community. Prior to joining Intralinks, Ronen was a management and strategy consultant for several years. Ronen has also worked in the financial sector, specifically in the venture capital and private equity fields. He graduated from New York University’s Stern School of Business with a dual degree in Economics and International Business, with a specialization in Entrepreneurship.