Suzuki Motor proposes purchase of minority shareholders’ stake at minimum Rs406 per share

Suzuki Motor Corporation (SMC), the majority shareholder in Pak Suzuki Motor Company (PSMC), has proposed to purchase 22.14576 million ordinary shares – representing 26.91% of the paid-up capital – held by minority shareholders at a minimum purchase price of Rs406 per share.

The proposed minimum purchase price has been determined as per the requirements of the regulation, PSMC said in its notice to the Pakistan Stock Exchange (PSX) on Monday.

The notice resulted in PSMC’s share price hitting the lower limit as it ended at Rs504.39 after earlier hitting an intra-day high of Rs586.19 (the upper limit).

“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 that it has appointed Arif Habib Limited as the purchase agent.

In its notice on Monday, PSMC said that the sponsor and majority shareholder, Suzuki Motor Corporation, Japan (SMC or “Sponsor”) intends to obtain full ownership of the “company by purchasing all outstanding shares and securities held by minority shareholders, to increase ownership and to consider the delisting of the company from PSX”.

The company said the operations of Pak Suzuki resulted in losses in 2019, 2020 and 2022. It has also resulted in a loss up to the 3rd quarter of this financial year i.e. 2023. From 2019, dividends have not been paid to shareholders except for 2021, it said.

“Therefore, the sponsors of the company believe that it is their responsibility to offer the minority shareholders a fair opportunity to exit so that they can make the best use of their investment in other profitable avenues,” PSMC said.

Background

PSMC, on October 12, had said it will review and consider the majority shareholder’s intent to purchase all outstanding shares of the company and delist from the PSX.

A week later on October 19, the Board of Directors (BoD) of PSMC decided to purchase all outstanding shares of the company and delist from the PSX.