KARACHI, Feb 26: Corporate mergers and acquisitions (M&A) are picking up pace. People watching the moves suspect that combining assets in the financial sector has been prompted by the regulators’ intent on forcing consolidation of institutions in fewer but strong entities, rather than numerous but undercapitalised weaklings.
Then there are individuals and entities, particularly in industrial sector, that are in race to flaunt the size. But for all that economists term the process, a good omen. That most of such acquisitions attract foreign capital make the deals more worthwhile.
Some of the M&A activities in recent days, which materialised, are under process and the one that fell apart, include the following:
BANKISLAMI-SIGMA LEASING: The two companies, in separate but similar announcements said that the plan of takeover of Sigma Leasing Corporation Limited by BankIslami, had collapsed.
Earlier on Dec 10 last year, the companies had expressed their intention to go along with the deal, which stipulated acquisition of 99.95 per cent shares in Sigma Leasing along with management control, by BankIslami, subject to necessary due diligence and approvals from relevant regulatory authorities.
The parties had entered into a Memorandum of Understanding (MoU) for the purchase. But late last week, the companies informed the stock exchange: “The negotiations of acquisition has not materialised, as both parties have mutually decided not to pursue the transaction further, due to changes in tax laws”.
UNIVERSAL LEASING: The company announced on Tuesday that its merger with Al-Zamin Leasing Corporation Limited (formerly Crescent Leasing Corporation Limited) was approved by the Securities and Exchange Commission of Pakistan (SECP) with effect from Feb 25.
The swap ratio has been agreed at 1:244, which means the holder of 2.44 shares in Universal Leasing Corporation Limited will be entitled to one share in Al-Zamin Leasing Corporation.
SAUDI PAK BANK: Bank Muscat SOAG, IFC, Nomura European Investment Limited and Mr Shaukat Tarin (collectively, ‘the acquirers’) have entered into share purchase agreements to acquire 425.61 million shares in Saudi Pak Commercial Bank Limited, which constitute 85.10 per cent of the paid-up capital of the ‘target company’.
In pursuant to the listed companies (substantial acquisitions of voting shares and take-overs) Ordinance 2002, the acquirers offered on Monday to purchase through public offer, a total of 7.302 million shares, representing 1.46 per cent of the paid-up capital of the Saudi Pak Bank.
The announcement of the deal, first made on Feb 22, disclosed the offer price at Rs29.30 per share.
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