LHC approves MetaTech, Big Bird Foods merger

July 01, 2024 (MLN): The Lahore High Court, in its order dated June 26, 2024, has approved the merger petition and sanctioned the Scheme of Arrangement and Reconstruction for the transfer of MetaTech Trading Limited's (PSX: META) entire business and operations into Big Bird Foods Limited.

META shared the development in its notice to the Pakistan Stock Exchange (PSX) on Monday.

The court has directed that the Scheme shall come into effect according to its relevant clauses and be incorporated into the Court's judgment.

As per the scheme, BBFL will be listed at the Pakistan Stock Exchange (PSX) by virtue of listing status of META and accordingly, BBFL would be having capacity to raise funds from the market.

Capital market can act as a catalyst to the growth of merged company i.e. Big Bird Feeds Limited, and listing status can give it the requisite fund-raising power to harass its future diversification plan, if any.

The scheme envisages that its principal object is to effect merger/amalgamation of META with and into BBFL for the following reasons.

Firstly, the book value of META per share is Rs0.36 whereas its market value is Rs7.29 per certificate (as on June 21, 2023).

Secondly, META has a weak financial position having limited capacity to raise funds. However, BBFL has strong financial position and shareholders of META can participate in profitability of BBFL (with healthy EBITDA i.e. Earnings Before Interest, Taxes, Depreciation and Authorization) soon after merger.

Moreover, technical, financial, sales & marketing expertise of BBFL will be an added advantage for the operations of META,

Thus, it is expected to have positive synergies with this merger for the shareholders of both of the merging entities.

The scheme further envisages that a free float of 30% i.e. volumes will be created by BBFL with good free float once it is listed at PSX.

The requisite changes in the Memorandum of Association of BBFL shall be made, if required, to accommodate the intended activities of META (as a transferor) in BBFL (as a transferee).

Upon the completion of merger/amalgamation through the intended Scheme, META will be dissolved without winding-up and the shares of BBFL will be issued to -the registered members/ shareholders of META.

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