On business: South Carolina firm is now a heavy hitter in the Falkland Islands
The short war between Britain and Argentina over control of the Falkland Islands came to an end on June 14, 1982.
As that 35th anniversary approaches, a more recent conflict caused tensions to flare between the two nations. This time, the battle was all about a business.
The latest skirmish centered on the ownership of FIH Group plc, an obscure publicly traded company that has one foot planted in the South Atlantic archipelago, the other in Europe.
When the dust settled a few weeks ago, one of South Carolina’s largest privately held companies emerged as the majority shareholder.
The roughly $12 million investment capped a fast-moving sequence of events that included an unsolicited buyout proposal from a Buenos Aires billionaire that nearly triggered an international incident.
The InterTech Group Inc.’s unlikely journey from its global headquarters near Park Circle to one of the world’s tiniest economies began when it added FIH Group to its stock portfolio years ago.
The North Charleston company’s other publicly disclosed investments tend to be more pedestrian, from apartment complexes in the Columbia suburbs to ice rinks in Canada to natural gas distributors in Kentucky and New York.
FIH Group, which went by Falkland Islands Holdings until last year, adds an exotic if not quirky edge to that collection of assets. A British financial columnist in 2015 compared the business to the pushmi-pullyu, the fictional dual-headed beast from “Dr. Doolittle.”
“It’s kind of a neat company,” said Robert Johnston, chief strategy officer at InterTech. “It’s like a mini-conglomerate.”
It’s also steeped in history, much like Hudson’s Bay Co., the 347-year-old Canadian retailing icon that InterTech briefly owned, from 2006 to 2008.
FIH Group hasn’t been around quite that long. It originated as the Falkland Islands Co. in 1852, courtesy of a royal charter, to establish a strategic shipping and agriculture outpost for the British Empire. By then Britain already had asserted its rule over the chain, though Argentina also maintains a claim to the territories.
The company plugged along quietly for much of the next century. In the early 1960s, it was listed on the London Stock Exchange. After being bought and sold twice, it was spun off and became an independent publicly traded business again in 1997.
InterTech began acquiring the stock through a trust controlled by its owners, the Zucker family. It liked the clean balance sheet and the dividend FIH Group was returning to shareholders, according to Johnston.
“It’s been years since we took the first investment. ... We’ve held it ever since,” he said.
London-based FIH Group has diversified beyond its rugged old stomping grounds in the last decade or so. For instance, it bought a ferry business that serves Portsmouth Harbour on the south coast of England. In 2008, it acquired Momart, which stores and transports pricey art exhibits and antiques for customers that have included Christie’s auction house and Kensington Palace, according to reports.
“It’s an interesting and competitive business in Europe,” Johnston said.
Back in the Falklands, FIH Group remains a big fish in that small and remote pond. It owns prime swaths of real estate, operates car dealerships and other retailers, and services the fleet of squid boats that ply the local fishing waters.
The low-key company was thrust into the spotlight earlier this year, after a major shareholder from the U.K. offered to take it private. That drew the interest of billionaire Argentine property magnate Eduardo Elsztain, who said he was considering his own bid.
It quickly became apparent that relations between the two nations over the disputed Falklands remain frosty.
FIH Group called Elsztain’s proposal “unwelcome” and a “real hazard” to its operations and employees. The governing body of the islands also pushed back, threatening to strip the 165-year-old company of its valuable land and shipping rights if the wealthy Argentinian investor gained control of it.
According to reports, a threat to Britain’s rule over the Falklands could require Prime Minister Theresa May to step into the fray.
“If Elsztain makes a formal offer, it will test the Prime Minister’s pledge to block foreign takeovers not in the national interest,” the London Evening Standard wrote in March.
It never reached that point. Elsztain abandoned his idea without making a formal offer.
Shareholders, meanwhile, had rejected the original bid from the U.K investor, who, in turn, offered to sell all of his stock to InterTech in late April. The North Charleston company took the deal. It now owns about 29 percent of FIH Group, giving it a big say in how the business is run.
Management sounded relieved, telling investors in early May that InterTech is a “long-term shareholder” and that it “has provided certain assurances to the board as to its intentions.”“In particular, it has stated its support for the long-term growth of the business and its subsidiaries, as a London quoted company,” FIH Group said in a statement.
The Falklands play includes what Johnston called “a lottery ticket” that could pay off if oil-drilling recovers in that part of the Atlantic or if Argentina eases local airspace restrictions, allowing more tourists to fly to the islands.
“That would be very good for the economy of the Falklands,” he said last week.
Otherwise, InterTech still likes FIH Group’s businesses and plans to stick with its buy-and-hold strategy — as long as it makes sense to do so.
“It’s a perfect fit for us, but, like anything, never say never,” Johnston said.