KARACHI: Following the confirmation of a Sale-Purchase Agreement between KES Power and Shanghai Electric Power on Monday, the stock of K-Electric recorded the highest trading volume of 41 million shares besides gaining 2.5 per cent to close at Rs9.33 per share.

According to a notice to the Pakistan Stock Exchange (PSX) on Monday, KES Power will sell 66.4pc shares in KE to Shanghai Electric Power Company for $1.77 billion.

According to Topline Securities analyst Hashim Sohail, the transaction will translate into a share price of Rs10.10. “Upon completion, this will be the largest private-sector transaction in Pakistan,” he stated.

According to Listed Companies (Substantial Acquisition of Voting Takeovers) Regulations 2008, a company that acquires more than 30pc shares in a listed firm has to make a public announcement of the offer within 180 days of its announcement of intention to acquire the controlling stake in the target company.

This can be extended by a maximum of 90 days by the Securities and Exchange Commission of Pakistan (SECP) upon the request of the acquirer.

As per the present ownership structure, the company’s minority shareholding and free float stand at 8.5pc of the total shares or 2.3bn shares.

Furthermore, the government owns 24.4pc in KE. Assuming that the latter is not considered as minority, Shanghai Electric Power will have to acquire at least 50pc of the minority shareholding, which will amount to 1.2bn shares.

As per the regulations, the public offer price should not be less than the acquisition price.

But it can be a higher price arrived at by a few other mechanisms mentioned in the regulations.

Published in Dawn November 1st, 2016