Fauji Fertilizer Company Limited (PSX: FFC) has announced it will issue 150.87 million ordinary shares to eligible shareholders of Fauji Fertilizer Bin Qasim Limited (FFBL), excluding itself or its nominees, as of the record date, December 26, 2024. The announcement follows the Lahore High Court’s approval of a merger arrangement between the two companies.
The issuance will be carried out based on a share swap ratio of 1 FFC share for every 4.29 FFBL shares held. This means that for every 4.29 shares an FFBL shareholder owns, they will receive one share in FFC. The swap ratio reflects the relative value of the two companies, as assessed during the merger process.
For shareholders, this move represents a direct stake in FFC, a company with a larger market capitalisation and stronger financial fundamentals compared to FFBL. As a result, shareholders may gain from FFC’s more stable dividend history, better growth prospects, and market reputation.
In some cases, shareholders may end up with fractions of a share after the swap. For example, someone holding 10 FFBL shares would be entitled to 2.33 FFC shares. Since fractional shares cannot be issued, these fractions will be consolidated into whole shares and sold. The proceeds from this sale, after deducting costs, will be donated to a registered charitable institution. This provision ensures no resources are wasted while contributing to a social cause.
FFBL will provide shareholder entitlement details to FFC after the record date, ensuring a smooth transition for eligible investors. Meanwhile, FFC’s management has been tasked with completing all necessary legal and procedural formalities to implement the merger.
For the general public, the merger could lead to operational improvements in the fertiliser sector, ensuring better availability and potentially lower costs of agricultural products, which directly impacts food prices and inflation.
