Lucky Core acquires Lotte Chemical Pakistan
PHOTO: FILE
Lucky Core Industries (formerly ICI Pakistan) has acquired Lotte Chemical Pakistan at an estimated price of Rs31.29 per share, translating into a total transaction volume of Rs35.5 billion, according to Monday announcements at the bourse.
The board of directors at Lotte Chemical Corporation (LCC) South Korea, also the majority (75.01%) shareholders of Lotte Chemical Pakistan, authorised the sale of all LCC Korea’s shares (i.e., over 1.13 billion shares), said Faisal Abid, Company Secretary at Lotte Chemical Pakistan in a notice to the Pakistan Stock Exchange (PSX).
The company said in the notice that the divestment, which is subject to a share purchase agreement (SPA), was occurring “to optimise LCC Korea’s business portfolio”.
“The consummation of the proposed divestment will be subject to the procurement of all applicable regulatory and corporate approvals as may be required,” added the notification.
Lucky Core Industries also made a similar announcement, confirming the development in a separate notice at PSX.
The notices, however, did not disclose the value of the transaction. Global news outlet, Bloomberg, reported that the transaction took place at 192.4 billion Won (South Korean currency).
Accordingly, Arif Habib Limited calculated the transaction price to be around Rs31.29 per share, translating into a total sum of Rs35.5 billion.
On the other hand, Sherman Securities calculated the transaction to be at around Rs30.5 per share. It said that the parent company had disclosed that the total transaction value is KRW 192.4 billion (approximately Rs34.6 billion or $152 million) which is subject to the final settlement amount and may change considering the cash flow at the time of the transaction’s closing.
“Further, the SPA is expected to be executed on January 26, 2023, however, it may vary depending upon the progress. However, investors seem concerned about the completion of the transaction given the dollar crunch in the local market,” said the notification.
In June 2022, Lotte Chemical disclosed that its parent company was willing to dispose of its assets in Pakistan. Since then, the stock generated a return of 30%, it said.
Following the announcement in June, three potential buyers including Novatex, Asiapak and Lucky Core Industries showed their interest in acquiring a majority stake in the company.
Published in The Express Tribune, January 17th, 2023.
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