KARACHI, Dec 7: A Chinese company has conveyed its intention to Masood Textile Mills Limited — company listed on the KSE’s textile sector — to acquire 31.2 million shares, which approximate to 52 per cent of the 60 million issued and paid-up shares of Masood Textile Mills (the target company).
The proposed acquirer Shandong Ruyi Technology Group Co. Ltd, based in mainland China, is said to be an international enterprise group which holds $375m in total assets; specialises in textile and cotton made-ups and employs 20,000 people.
The announcement of intention under the relevant regulation of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008 was received by the company and the KSE from AKD Securities Limited, acting as “Manager to the offer” on behalf of the buyer.
Shandong Ruyi, the Chinese buyer, intends to acquire controlling shares of the target company through agreement/public offer.
“The total number of shares to be acquired may be subject to a change in the light of the public offer process to be complied by the Acquirer as per the provisions of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 and the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008”, the acting manager said in a notice to the investors.
Though thinly traded, Masood Textile Mills is among the profitable companies among the listed textile corporates. The company paid dividends to shareholders at a uniform rate of 15.5pc for each of the last three years 2011-13. During 2013-to-date 6 million shares of Masood Textile have come up for trading at the stock market.
The price of the stock has seen the low at Rs23.95 during 2013.
Although the notices released to the stock exchange on Thursday and Friday, contained few other details, it avoided to mention the price of acquisition per share. Yet at Sept 30, the book value of the company stock of the par value of Rs10 worked out at Rs62.26 and the company was comfortable with the cash flow with current ratio at 1.23.
For the period ended Sept 30, the company’s produced earning per share (eps) was of Rs4.41 and diluted eps at Rs3.50.
The price trend in Masood Textile for the last eight trading sessions has raised eyebrows. Although notices were released at the Exchange on Thursday and Friday (Dec 5,6), the market price of the share had started to hit the ‘upper circuit’, showing maximum allowable gain of 5pc over the previous day’s closing price, for six sessions in a row since Nov 27.
The Masood Textile stock price on Nov 27 stood at Rs48, which climbed to Rs140.81, but after getting to be ex-dividend, stood at Rs55.49 on Dec 2.
Four trading sessions since have seen the Masood Textile hit the ‘upper circuit’ each day, to close on Friday at Rs70.80.
The galloping stock price appears to show that some people may know what others do not. It could be pure ‘speculation’ but that too could have been done by people in the prior knowledge of intention of acquisition and possible price at which the majority shares are set to change hands.