Pak Suzuki Motor Company (PSMC) has set a minimum price of Rs406 per share for buying back its shares held by minority shareholders to get delisted from the Pakistan Stock Exchange (PSX).
The company finds no reason to stay at the stock market after booking losses and sharing no dividends with shareholders in the recent past.
Based on the company’s price, the PSX would now determine the buyback price, which would not be lower than the minimum price set by PSMC, Topline Research said.
PSMC, the manufacturers of Suzuki cars, has clarified earlier that the delisting from the stock market does not mean it will pull out of Pakistan. For the company, the country has remained an important market.
In a notification to the PSX, PSMC said “SMC (Suzuki Motor Corporation, Japan), the majority shareholder, proposes to purchase 22.14 million ordinary shares, 26.91% of the paid-up capital, of the company held by the minority shareholders at a minimum purchase price of Rs406 per share.”
The Japan-based majority shareholder intends to obtain full ownership of the company by purchasing all outstanding shares and securities held by minority shareholders in order to increase ownership and to consider delisting of the company from the PSX, it said.
PSMC has suffered losses in 2019, 2020 and 2022. It has also incurred losses up to the third quarter of current fiscal year. From 2019, dividends have also not been paid to shareholders except for 2021.
Sponsors of the company believe that it is their responsibility to offer minority shareholders a fair opportunity to exit so that they can make best use of their investment in other profitable avenues, it said.
The company’s share price has surged 62%, or Rs318, since it announced the delisting plan on October 19. Its stock closed at around Rs510 on Tuesday.
Read: Pak Suzuki board approves PSX delisting
Topline Research said the PSX rulebook did not specify a timeline for the bourse to determine the buyback price, “however, based on past precedent, it usually takes one to two months.”
Afterwards, the sponsors will be required to convey their acceptance to the purchase price fixed by the exchange within seven days of being informed of the exchange’s decision or may file an appeal against the decision.
“If the sponsors do not convey their acceptance to the purchase price and quantum fixed by the exchange and also do not file an appeal, the voluntary delisting application shall stand withdrawn.”
Based on previous experiences, there is potential for an upward revision from the proposed minimum price of Rs406 per share. “In the last four years (2020-2023), in six deals, the agreed price was higher by 13-485% from the minimum price determined by a company.”
As per updated regulations, where the sponsors’ shareholding is less than 90%, the sponsors will be required to increase their shareholding to at least 90% of total shares of the company to qualify for delisting.
Published in The Express Tribune, December 6th, 2023.
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