Buy-out: Chinese firm to acquire Masood Textile Mills

Published: January 14, 2014
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Masood Textile Mills is a vertically-integrated textile manufacturing company with in-house yarn, knitting, fabric dyeing, processing, laundry and apparel manufacturing facilities. PHOTO: FILE

Masood Textile Mills is a vertically-integrated textile manufacturing company with in-house yarn, knitting, fabric dyeing, processing, laundry and apparel manufacturing facilities. PHOTO: FILE

KARACHI: 

Majority shareholders of Masood Textile Mills have formally agreed to sell 52% shareholding through a Share Purchase Agreement with a Chinese group and two other acquirers, according to a notice sent to the Karachi Stock Exchange (KSE) on Monday.

The decision follows the amended public announcement of intention notification that Shandong Ruyi Science and Technology Group, Nazia Nazir issued on January 3 for the acquisition of up to 31.2 million ordinary shares of Masood Textile Mills through AKD Securities, which is acting as a manager to the offer.

Masood Textile Mills is a Faisalabad-based, vertically-integrated textile manufacturing company with in-house yarn, knitting, fabric dyeing, processing, laundry and apparel manufacturing facilities. It posted a net profit of Rs906.3 million in 2012-13, which was 8.5% higher than its earnings in the preceding fiscal year. Its revenues grew at an annualised rate of 25% between 2008 and 2012.

 photo Rs14778_zps92c52c44.jpg

Speaking to The Express Tribune, Topline Securities research analyst Muhammad Tahir Saeed said the transaction is expected to range between Rs180 and Rs200 per share. This means that the deal should be worth between Rs5.6 billion and Rs6.2 billion.

The company’s total issued shares are 60 million, out of which only 10 million shares constitute its free-float. Two of the three acquirers — Nazia Nazir – already own 2.3% and 30.1% stakes in the company.

Following the expression of interest by the Chinese group to acquire a majority stake in the company – which is a first-of-its-kind development in the country’s textile sector – the share price of Masood Textile Mills has soared tremendously.

Its per-share price increased to Rs147.78 at the end of trading on Monday, up 153.6% from December 2 when it stood at Rs58.26. The benchmark index increased 8.9% during the same period.

After acquiring 52% stake through this deal, Saeed said, Shandong Ruyi Science and Technology Group is expected to make a tender offer to purchase half of the remaining shareholding – or 24% of the company’s total issued shares.

“I expect the rally (in the company’s stock price) to continue going forward,” he noted.

Masood Textiles Mills produces value-added textile products, whose exports to the European Union (EU) are expected to increase due to the GSP Plus status that Pakistan has recently received.

“Chinese investment in the textile sector coupled with the GSP Plus status shows investors’ confidence and untapped potential in Pakistan’s market,” Saeed said, adding the agreement will encourage other foreign investors to explore investment opportunities in Pakistan.

“This may set a benchmark, which can trigger a re-rating of other companies in the textile sector,” he added.

Published in The Express Tribune, January 14th, 2014.

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Reader Comments (16)

  • fahim
    Jan 14, 2014 - 8:13AM

    It is just the start… we have sold our entire country, economy, power, trasport, telecom, defence, railways, mining, automotive, textile, damn.. you name it… we have sold everything to these shrewd chinese, who come here with dollars and buy us out.. they provide investment only to source material and labor from china and then shift the profit back.. this is our new master and we must obey its orders..

    Recommend

  • junaid Lodhi
    Jan 14, 2014 - 11:35AM

    Its just the tip of the ice burg more to come ahead.I forsee a drastic change which will prove to be the sign of prosperity coming!

    Recommend

  • unbelievable
    Jan 14, 2014 - 8:48PM

    Terrible news. You need foreign capital to invest in production facilities – preferably in manufacturing other than textiles. You clearly don’t need one of your primary competitors coming in and buying out your textile production capabilities – it’s likely they will concentrate production on low margin yarn which they will send to China to convert into high margin finished goods.Recommend

  • ASK
    Jan 14, 2014 - 11:23PM

    Textile sector is one of biggest industry sector of pakistan which was pressed by non regular availability of gass and non-favourable last goverments policies.

    Although this goverment has made more strategic policies to turnaround this sector once again such as GSP plus and favourable tax incentives but the machines of textile mills are running on gass which require constant gass to produce cloth to meet demand of domestic and international market. Recommend

  • Hogarth
    Jan 15, 2014 - 1:04AM

    Slowly slowly, chinese are eating a country called pakistan, in which pakistani’s never able to undersand.

    Recommend

  • Giri
    Jan 15, 2014 - 1:05AM

    Tommarrow ‘whole pakistan is on sale to china’

    Recommend

  • Golden Horde
    Jan 15, 2014 - 4:17AM

    The indians commenting on this article are crying!!

    While we the pakistanis are very happy that the chinese are investing in our country. Welcome to the chinese as our future is tied together. Indians will keep crying more and more.

    Recommend

  • Khurram Awan
    Jan 15, 2014 - 7:51AM

    @fahim: Are you in your senses??- Do you know why Musharraf regime was successful than other regimes in Pakistan. The reason was that foreign investment was flowing in and Our currency stabilized and also every foreign company brought their own expertise and knowledge from which local entrepreneurs and investors learned as well.
    Faisalabad is a hub of cotton related products but foreign investors were not keen in investing in any mill and even some mills gone bankrupt and closed in the past. This take over will now bring Faisalabad on the global map and in the future we will see more accusations.
    Moreover with this deal around 25 Million US Dollars will flown in Pakistan and every dollar coming towards Pakistan is better for us and also the Sellers can invest these millions of dollars elsewhere which is good for our economy.

    Recommend

  • antanu
    Jan 15, 2014 - 4:42PM

    @fahim:
    Dont be stupid. Today selling and buying of business in other countries is a norm.Many indian companies have been bought by US and Europian entities and vise versa. But then you would with your biased mind wridicule anything Pakistani. Its a shame.

    Recommend

  • Umar
    Jan 15, 2014 - 4:59PM

    Such capital inflow is in the benefits of Pakistan as they are not only investing in textile sectors in Pakistan but also investing in Power sector to secure their investment. By investing heavy amounts they will install state of the art production facilities that will increase efficiency and I guess it is a win-win situation for both. On the other hand China was loosing competitive edge in their home country and they would gain through this transaction.

    Recommend

  • Lala Gee
    Jan 15, 2014 - 10:05PM

    We must encourage Chinese to buy more Pakistani firms and modernise them …this way we will get better products and tech! …Way to go … Recommend

  • dude
    Jan 15, 2014 - 10:14PM

    @antanu:

    Many indian companies have been bought
    by US and Europian entities and vise
    versa. But then you would with your
    biased mind wridicule anything
    Pakistani.

    you are a pakistani, again proved.Recommend

  • Jan 18, 2014 - 11:57AM

    Instead of buying strong entities, pursue foreigners to invest in new ventures.!Recommend

  • Muhammad Afzal Khan
    Jan 21, 2014 - 4:45PM

    Chines r our trusted friends n investing in our country means economic activities will flourish, generates new jobs. Their buyers n marketing efforts will b beneficial for Pakistan.

    Recommend

  • Wasim Ahmad
    May 28, 2014 - 5:11PM

    Overall its good for us to invest in our country, it will enhance job opportunity and new ideas from other people. We will be able to get trust of other foreigner like this contracts and economy will in good position….

    Recommend

  • shah
    Jun 2, 2014 - 11:43AM

    Great Step Long Live Pak China Friendship and To All Jealous Indians Pretending To Be Pakistanis GET A LIFE!!!!!!!

    Recommend

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