KARACHI: Pak Suzuki Motor Company Ltd (PSMC) may decide to delist from the Pakistan Stock Exchange (PSX) as its majority shareholder has expressed its intention to scoop up the entire shareholding currently resting with minority shareholders.
The Japanese automaker told investors on Thursday it’ll “review and consider” the proposal by the majority shareholder to acquire all outstanding shares to become a privately held firm in a board meeting on Oct 19.
As a result, the share price of PSMC rose 5.47 per cent to Rs143.44 as investors hurried to accumulate the stock in anticipation of a considerably higher price at which voluntary delisting may take place.
The current market value of the automaker’s share is subdued because the extended shortage of dollars in the national kitty has forced the firm to reduce its imports and scale down production.
However, the PSX regulations specify five methods to determine as many benchmark purchase prices for the voluntary delisting process. The ultimate minimum purchase price can’t be set lower than the highest of the five benchmark rates determined on the basis of different criteria.
Arif Habib Ltd analyst Muhammad Abrar said the expected price for the voluntary delisting should hover around Rs222.30 per share, which is the volume-weighted average price of the last three years.
The free-float, which represents the easily tradeable shareholding not controlled by sponsors, consists of 26.5pc of the company’s total market capitalisation.
A purchase price of Rs222.30 apiece should result in a total transaction value of Rs4.8bn.
The other four criteria for benchmark prices include the volume-weighted average market price of the last five days (Rs133.20 per share), estimated net realisable value of assets (Rs122.70 per share), price-to-earnings multiple approach (not applicable because the company is in loss), and the rate at which the sponsor had purchased the company’s shares from the open market in the preceding year (not applicable).
Published in Dawn, October 13th, 2023