Pak Suzuki’s major shareholder offers to buy out 26.91% minority shares

The majority shareholder of Pak Suzuki Motor Company Limited (PSMC), Suzuki Motor Corporation (SMC), has proposed to acquire the remaining 26.91% shares of the company from the minority shareholders for Rs406 per share.

This offer is part of SMC’s plan to delist PSMC from the Pakistan Stock Exchange (PSX) and make it a wholly-owned subsidiary.

According to a notice issued by PSMC to the PSX on Monday, SMC has submitted an application to the Securities and Exchange Commission of Pakistan (SECP) for the approval of the voluntary delisting of PSMC. The notice stated that SMC intends to purchase the minority shares through a tender offer under the Companies Act 2017 and the PSX Regulations.

“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 Rs406 per share,” read the notice.

PSMC said it has appointed Arif Habib Limited as the purchase agent.

The notice further stated that the offer price of Rs406 per share represents a premium of 37.5% over the closing price of Rs295.36 per share on November 30, 2023, the last trading day before the announcement of the offer. The offer price also reflects a premium of 38.8% over the average closing price of Rs292.54 per share for the last six months.

The notice added that the offer is subject to the approval of the SECP, the PSX, and the acceptance of at least 90% of the minority shareholders. The notice also mentioned that the Board of Directors of PSMC has resolved to delist the company from the PSX on October 19, 2023.

Earlier on October 12, PSMC announced that it would evaluate the proposal of its majority shareholder to buy all the remaining shares of the company and take it off the PSX. A week later, on October 19, PSMC’s BoD agreed to accept the offer and approved the delisting of the company from the PSX.

Pak Suzuki Motor Company is the one of three big automobile manufacturers in Pakistan, with a market share of 42.6% as of September 2023. The company produces and sells various models of Suzuki cars, motorcycles, and commercial vehicles.

SMC is a Japanese multinational corporation that owns 73.09% of PSMC’s shares. SMC has cited various reasons for its decision to delist PSMC, such as the challenging business environment, the regulatory uncertainty, the low liquidity, and the high cost of listing.

Minority shareholders of the PSMC have suffered losses and missed dividends for several years and the company incurred losses in 2019, 2020, and 2022, with ongoing losses recorded up to the third quarter of the current financial year (2023).