PRL, Air Link look to acquire majority stake, control of Shell Pakistan

Pakistan Refinery Limited (PRL) and Air Link Communication (AIRLINK) have jointly expressed their intention to acquire the majority stake and control of Shell Pakistan Limited.

The development was shared by brokerage house Next Capital Limited, which was appointed manager to the offer, in a notice to the Pakistan Stock Exchange (PSX) on Monday.

“Next Capital Limited (Manager to the Offer) has submitted a Public Announcement of Intention (“PAI”) on behalf of Pakistan Refinery Limited (PRL) and Air Link Communication Limited (Air Link) on July 17, 2023, to acquire 77.42% shares and control of Shell Pakistan Limited by PRL and Air Link under the Securities Act, 2015 and the Listed Companies (Substantial Acquisition of Voting Shares & Takeovers) Regulations, 2017,” read the notice.

As per the PSX notice, the two companies intend to acquire 77.42% – 165.7 million shares – through an agreement, and another 11.29%, which translates into 24.16 million shares, through public offer.

This translates into a total potential acquisition of 88.71%.

Analysts said the 77.42% share is the stake offered by Shell Plc, the parent company of Shell Pakistan Limited.

“As per PSX regulations, if a company intends to acquire over 30% stake of a company, it needs to offer to acquire shares from minority shareholders as well, which translates roughly to half of the total free-float.”

PRL is one of the five refineries operating in Pakistan, and engaged in the production and sale of petroleum products. It is a subsidiary of Pakistan State Oil Company Limited.

Meanwhile, Air Link Communication is one of the smartphones distributors, manufacturers, and retailers in the country, and has a nationwide network.

Background

Last month, Shell Pakistan Limited announced that its parent company, Shell Petroleum Company Limited (SPCo), has notified its intent to sell its shareholding in SPL.

“We hereby inform you that the Board of Directors of Shell Pakistan Limited (SPL), in a meeting of its Board held on June 14, 2023, have been notified by The Shell Petroleum Company Limited (SPCo) of its intent to sell its shareholding in SPL,” read the notice, issued in June.

Back then, SPL said that the development would have no impact on its current business operations, which will continue.

While the announcement did not disclose the amount of shareholding SPCo intends to sell – it had a 77.42% stake in SPL as of December 31, 2022 (a little over 165.7 million shares), according to the annual report for that year – a company statement did convey that the oil giant is “seeing strong interest from international buyers”.

SPL is a subsidiary of Shell Petroleum Company Limited, United Kingdom, which is a subsidiary of Royal Dutch Shell Plc, one of the world’s largest energy and petrochemical companies.

The company markets petroleum products and compressed natural gas, and also blends and markets various kinds of lubricating oils.

Back in May, Shell Pakistan Limited announced its financial performance for the first quarter of 2023, which was severely impacted by the ongoing economic crisis in the country.

The earnings of the company turned crimson in 1QFY23 versus a similar period last year – from a profit after tax of Rs2 billion, the company posted a loss of Rs4.6 billion.

The loss came on the back of an unprecedented devaluation of the rupee, rising inflation and macroeconomic uncertainty.