June 26, 2023 (MLN): Attock Petroleum Limited (PSX: APL) could potentially take over Shell Pakistan Limited (PSX: SHEL) due to its strong balance sheet position and backing of a foreign company (Pharon Investment), the latest report by Insight Securities highlighted.
In terms of valuation, SHEL's enterprise value currently stands at Rs184 per share, representing a 62% increase from the last close.
“We have assessed the market value of SHEL's assets, including 125 acres of land, a storage terminal with a capacity of 156k tons, and a lube blending plant, which collectively contribute Rs181 per share to the overall value.” It added.
After accounting for other assets and net liabilities, the estimated value of SHEL stands at Rs184 per share.
When comparing APL with SHEL, APL possesses 127 acres of land, a storage terminal with a capacity of 192k tons, and 6 CO retail sites, surpassing SHEL in these aspects.
Additionally, APL boasts a cash position of around Rs15.6bn. Furthermore, APL demonstrates higher cash flow generation compared to SHEL, making it more attractive to potential investors.
With a cash position of Rs15.6bn, APL has the financial capacity to acquire a 77.4% stake in Shell Petroleum Company.
According to news reports, Shell Petroleum Company is seeking a foreign company to take over SHEL, as the country is facing a forex liquidity crisis and acquisition from foreign companies can smooth out the process, the report further added.
Overall, the strong financial position, superior asset portfolio, and ability to acquire a significant stake in Shell Petroleum Company make APL a compelling candidate for the potential takeover of SHEL.
