Dewan Cement finally strikes deal with Mega Conglomerate after roller coaster week

Post acquisition, M. Habibullah Khan- who already controls Pioneer cement- will become one of the biggest players in Pakistan's influential cement industry.

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LAHORE:  A bourse notification filed Wednesday by BMA Capital Management Limited  disclosed that Mega Conglomerate (Pvt) Limited was acquiring 87.5 percent majority stake in Dewan Cement Limited (75% through agreement and 12.5% through public offering).

“The scrip that stole the show today (Wednesday) turned out to be DCL, which saw the stock price oscillating from Lock to Cap in the final hour. The intention to acquire DCL, which was very much anticipated by the market, saw the stock moving both ways with the optimism that bid price will be much higher than current trading price and the weighted average trading price which was mentioned in the notice only to show past trend,” read an AHL (Arif Habib Limited) analyst report.

BMA Capital Management Limited (BMA) will be acting as manager to the offer by Mega Conglomerate (Pvt) Limited for this acquisition. Mega Conglomerate will be acquiring 423,599,175 shares, which constitutes 87.5 percent of total issued shares of Dewan Cement Limited.

No details of the financial aspect of this acquisition were disclosed in this filed notification.

Furthermore, BMA said “The Public Announcement of Intention is intended to be published on February 2, 2018 in one English and one Urdu newspaper in accordance with the Securities Act, 2015 and the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017.”

Last week, PSX issued a warning on suspending trading of shares in Dewan Cement Limited (DCL) stocks, if the entity was unable to clarify stated objections within the next weeks.

Due to this, trading in DCL’s shares was halted at lower limit of 5 percent and fell Rs1.22 to Rs23.25 at end of Friday’s session. During Friday’s session, DCL shares were among the top four traded ones with over 19.25 million shares exchanged.

On Monday, a bourse notification filed by Pakistan Stock Exchange (PSX) revealed the Sindh High Court on 27th January ordered not to place Dewan Cement in the defaulter’s segment.

The date of the next hearing is scheduled for 7th February, read the notification. Also, a copy of the court order halting PSX from moving DCL into defaulter’s segment was filed separately by the company.

Mega & Forbes group (MFG), is a diversified business conglomerate which has undergone rapid advancement since its inception. Pioneer Cement is also owned through a special purpose vehicle by Mega and Forbes Group’s (MFG) Chairman M. Habibullah Khan. After acquiring DCL, he is expected to become an important and influential player in Pakistan’s cement industry and its infamous representative body, All Pakistan Cement Manufacturers Association (APCMA). DCL has a capacity of more than 2,880,000 tons per annum from two separate manufacturing units, comprising of Pakland Cement Ltd in the south., and Saadi Cement Ltd in the north.

Currently, MGF has a strong presence in shipping, logistics, terminal operations, port services, transportation, telecommunications, trading, real estate development, power, FMCG, software development and manufacturing industries.

At start of December, Dewan Cement’s stock price was Rs 12. It doubled and reached to Rs 23.99 by January 11 fueled by market rumours regarding the company’s acquisition.

Dewan Cement is owned by the group Yousuf Dewan Companies (YDC) which owns diversified business belonging to automotive engineering, textile, sugar and cement sectors.

YDC is a known bank defaulter, and according to reports, it had been telling banks that it would fulfill its debt obligations once the cement deal got sealed.

DCL shares closed the day trading at Rs26.38, up Rs0.75 and KSE-100 index closed at 44,049.05 points, down 184.06 points on Wednesday.

 

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