Pak Suzuki Motor Company (PSMC) has set a minimum price of Rs 406 per share to buy back its shares held by minority shareholders in order to be delisted from the Pakistan Stock Exchange (PSX).
The company finds no reason to remain listed after booking losses and going dividend-free with shareholders in the recent past.
Based on the company’s price, PSX would now set the buyback price, which will not be lower than the minimum price set by PSMC, Topline Research said.
PSMC, the makers of Suzuki cars, earlier clarified that the delisting does not mean it will exit Pakistan. For the company, the country remained an important market.
In a notification to the PSX, PSMC said that “SMC (Suzuki Motor Corporation, Japan), the majority shareholder, proposes to purchase 22.14 million common shares, 26.91% of the paid-up capital, of the company held by the minority shareholders at a minimum purchase price of Rs 406 per share.”
The Japan-based majority shareholder plans to acquire full ownership of the company by buying all outstanding shares and securities held by minority shareholders in order to increase ownership and consider delisting the company from the PSX, it said.
PSMC made losses in 2019, 2020 and 2022. It has also incurred losses till the third quarter of the current financial year. As of 2019, no dividends have also been paid to shareholders except in 2021.
The company’s sponsors believe it is their responsibility to offer minority shareholders a fair exit opportunity so they can make the most of their investment in other profitable avenues, it said.
The company’s share price has risen 62%, or Rs318, since it announced the delisting plan on October 19. Its stock closed around Rs 510 on Tuesday.
Reading: Pak Suzuki board approves delisting of PSX
Topline Research said the PSX rulebook did not specify a time frame for the exchange to set the buyback price, “however, based on past precedent, it usually takes one to two months.”
Sponsors will then have to give their acceptance to the purchase price determined by the exchange within seven days of being informed of the exchange’s decision, or they can appeal the decision.
“If the sponsors do not accept the purchase price and the amount determined by the stock exchange and also do not file an objection, the voluntary delisting application will be withdrawn.”
Based on past experiences, there is scope for upward revision from the proposed minimum price of Rs 406 per share. “In the last four years (2020-2023), in six deals, the agreed price was 13-485% higher than the minimum price set by a company.”
According to the updated regulations, where the shareholding of the sponsors is less than 90%, the sponsors will have to increase their participation to at least 90% of the total shares of the company to qualify for delisting.
Published in The Express Tribune, December 6u2023.
a href=”https://tribune.com.pk/story/2449068/psmc-sets-price-at-rs406-for-share-buyback”>Source link