In a surprise move, Morinaga Milk Company of Japan, late last month, announced that it planned to set up manufacturing facilities worth Rs4.8bn for Morinage infant formula products in Pakistan.

A market watcher claimed that it was one of the biggest Morinage investments outside Japan. ICI Pakistan would hold a controlling stake of 51pc in the proposed project.

A Dutch company, FrieslandCampina International Holding BV, has agreed to pay $460m for the acquisition of a major stake in Engro Corporation Limited’s food subsidiary, Engro Foods.

What is it then that has endeared Pakistan to foreign conglomerates? And more importantly, are foreign acquisitions of local entities or stakes always a blessing for the target country?

Turkey’s largest industrial conglomerate Arçelik AS, announced the $258m acquisition of Dawlance, Pakistan’s market-leading home appliance brand.

Germany’s biggest, and the world’s second largest, automobile manufacturer is keen to see Volkswagen roll on the roads of Pakistan.

Contrary to the general perception that Chinese investors are in talks only to acquire the country’s cement plants, following the $50bn China-Pakistan Economic Corridor (CPEC) that focuses on projects in energy and transport infrastructure, Tokyo is spreading its wings far and wide.

Chinese state-owned automobile manufacturer, JAC Motors plans to produce cheaper editions of cars in Pakistan; work on the project has already started at Gwadar. Shanghai Electric Power Company Ltd is interested in buying 66.4pc shares in K-Electric.

The Pakistan Stock Exchange has received 17 expressions of interest, including that of Shanghai Stock Exchange, to acquire 40pc strategic shares in the bourse.

But this is only a short-list of transactions in the offing. Corporate Pakistan is in the throes — less of mergers and more of acquisition activity, not seen in recent times.

“For the first time in ten years, global investors are giving a hard look at Pakistan as a country for investment due to the improving law and order situation, better governance, lower perception of risk and corruption.

“The annual Global Competitiveness report of the World Economic Forum, released recently, has improved Pakistan by four notches from 126th to 122nd position in the corruption perception index 2016-17”, says Fawad Khan, director business development at KASB Securities.

And most analysts tend to agree. Faisal Shaji, chief strategic officer at Standard Capital believes that improving dynamics have made Pakistan an attractive destination for international investment giants engaged in fast moving consumer goods (FMCG).

This is due to the country’s burgeoning middle class, rising health awareness and increase in per capita income, which leaves more money, in the hands of people, to spend.

But some experts only mutely agreed to these suggestions. One detractor reminded that on the ‘World Bank’s Doing Business Report, 2015’, Pakistan was still stuck at a low 138 place among the list of 189 countries.

“A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm”, the WB Doing Business Reports explain in their preamble.

What is it then that has endeared Pakistan in the eyes of foreign conglomerates? And more importantly: Are foreign acquisitions of local entities or stakes always a blessing for the target country?

Zubyr Soomro former managing director of Citibank Pakistan, makes a convincing point: “Mergers and acquisitions can be significant for the capital they bring in, but often the mistake that is made is to focus on the money being put in. What is more important is the underlying basis of the partnership being established” he says.

He further underscores the key considerations: Do the visions of the parties align? Are the corporate cultures of the enterprises coming together such that they can integrate? Is the structure one that can leverage the strengths of both parties? “It is the effective addressing of major issues like these that determine the success of mergers or acquisitions.” Zubyr concludes.

Several economists told this writer that Pakistan was not alone under the glare of corporate takeover vultures.

They said that a wave of mergers and acquisitions had swept through all of Asia and Africa.

Sri Lanka, Manama (Bahrain), Ghana, Mongolia, Myanmar; Maldives and even Kazakhstan were all experiencing foreigners’ growing interest in investments into their countries. Nigeria, which appears at a low 169 place among the 189 countries on ‘WB Doing Business Report’, is ahead of the rest in attracting foreign flows in business partnerships and takeovers.

Khalid Mirza, former chairman Securities and Exchange Commission of Pakistan tries to make sense of it all: “The wave of foreign acquisitions of prime Pakistani companies currently occurring are either, a part of the acquirer’s global strategy, or are deemed ‘cheap’ investments in a business line well understood by the acquirer, or possibly both.

“Provided the company’s business model is intrinsically sound, a poor investment climate renders such an entity an attractive investment proposition for a worldly-wise investor who can manage the associated problems.

“A logical consequence of acquisitions within this paradigm is that in due course the acquired companies often get converted into de-listed private companies to provide the necessary room for free play by the acquirer”.

Published in Dawn, Business & Finance weekly, October 17th, 2016