Suzuki Motor Corporation (SMC), the parent company of Pak Suzuki Motor Company Limited (PSMC), has decided to purchase the shares of PSMC at a buy-back price of Rs609 per share, 50% higher than the sponsor’s original offer of Rs406 per share made in December.
The development was shared by SMC in a notice to the Pakistan Stock Exchange (PSX) on Thursday.
“We, Suzuki Motor Corporation (SMC), as the majority shareholder and sponsor of Pak Suzuki Motor Company Limited (PSMC), hereby convey the acceptance under PSX Regulation No. 5.14.7 to purchase the ordinary shares of Pak Suzuki at a buy-back price of PKR 609/- share,” the company said in its notice to the bourse.
The company shared that the buy-back is “subject to purchase of at least 13,915,775 ordinary shares (62.84%) out of the total 22,145,760 ordinary shares outstanding with the shareholders other than majority shareholder, to qualify for delisting as approved by the Voluntary Delisting Committee of the Exchange.”
SMC, the majority shareholder in PSMC, had originally proposed to purchase the shares representing 26.91% of the paid-up capital at a minimum purchase price of Rs406.
At the time, PSMC’s share price closed at Rs504.39, falling to its lower limit triggered by the purchase price notice that day.
However, the Voluntary Delisting Committee (VDC) determined the ‘minimum buyback price’ of Rs609 per share for PSMC.
The VDC-determined price would result in SMC doling out nearly an additional Rs4.5 billion if it intends to purchase the entire 26.91% of the paid-up capital.
Last year in October, PSMC formally announced to voluntary delist from the bourse, citing several factors including Pak Suzuki’s losses, lack of dividends, and cheap valuations at the PSX. PSMC incurred a loss of Rs6.34 billion (loss per share of Rs77) in 2022, in stark contrast to a profit of Rs2.68 billion in the previous year. In the nine months of 2023, its loss stands at Rs5.87 billion, despite massive earnings of Rs3.8 billion in July-September.
Since the delisting announcement three months ago, PSMC has also been a star performer at the PSX, rallying from Rs205.94 on October 19 to Rs898.57 on January 11. However, the share price has plummeted since then and is currently hovering at the Rs613 level.