At Rs. 406 per share, Suzuki Motor Corporation (SMC), the company’s majority shareholder, has offered to buy the minority shareholders’ remaining 26.91% of the shares of Pak Suzuki Motor Company Limited (PSMC).
Pak Suzuki Decided To Delist From PSX
This offer is a component of SMC’s strategy to turn PSMC into a wholly-owned subsidiary and delist it from the Pakistan Stock Exchange (PSX).
A notice that PSMC sent to the PSX on Monday states that SMC has applied to the Securities and Exchange Commission of Pakistan (SECP) to have its voluntary delisting of PSMC approved.
According to the notice, SMC plans to use a tender offer in accordance with the PSX Regulations and the Companies Act of 2017 to acquire the minority shares.
SMC Proposes To Buy PSMC’s Minority Shares
“Suzuki Motor Company (SMC), the majority shareholder proposes to purchase 22,145,760 ordinary shares (26.91%) of the paid-up share capital of the company (PSMC) held by the minority shareholders of the company at a minimum purchase price of Rs. 406 per share,” read the notice.
Arif Habib Limited has designated by PSMC as the purchase agent.
The notice went on to say that, as of November 30, 2023, the last trading day before the offer was announced, the offer price of Rs. 406 per share represents a premium of 37.5% over the closing price of Rs. 295.36 per share.
Additionally, the offer price represents a 38.8% premium over the last six months’ average closing price of Rs. 292.54 per share.
The notice further stated that the offer is contingent upon the PSX, SECP, and acceptance by a minimum of 90% of the minority shareholders.
PSMC’s BOD Decision on Delisting
The notice also stated that on October 19, 2023, the PSMC Board of Directors has decided to delist the company from the PSX.
Prior to that, on October 12, PSMC declared that it would assess the majority shareholder’s offer to purchase all of the company’s outstanding shares and remove it from the PSX.
One week later, on October 19, the Board of Directors of PSMC approved the company’s delisting from the PSX and accepted the offer.
One of Pakistan’s three major automakers, Pak Suzuki Motor Company held a 42.6% market share as of September 2023.
However, the company builds and markets a range of Suzuki automobile, motorcycle, and commercial vehicle models.
SMC’s Shareholding in PSMC
Moreover, 73.09% of PSMC’s shares owned by SMC, a multinational corporation based in Japan.
SMC has given a number of justifications for its choice to delist PSMC, including the difficult business climate, the unpredictability of regulations, the low liquidity, and the high listing expenses.
For a number of years, minority shareholders in the PSMC have experienced losses and missed dividend payments.
The business lost money in 2019, 2020 and 2022 and continued to lose money until the third quarter of the current fiscal year, 2023.
To read our blog on “Pak Suzuki shuts down its bike plant from Dec 1 till Dec 6,” click here.