PSMC shareholders likely to receive Rs222 per share in delisting offer

October 13, 2023 (MLN): The expected purchase price of the majority shareholders of Pak Suzuki Motor Company Limited (PSX: PSMC)'s intent to acquire all remaining shares will likely be Rs222 per share, offering a premium of Rs67.8 compared to the current market price of Rs154.2 per share.

Yesterday, the majority shareholders of PSMC expressed their intent to purchase all outstanding shares of PSMC and potentially de-list the company under Rule 5.14.1 of the listing regulations.

The Board of Directors (BoD) of PSMC in their notice on the same day informed that they will review this in the upcoming board meeting which will be held on Thursday, October 19, 2023.

To note, under rule 5.14.1 of the listing regulations as per the PSX rulebook, the proposed purchase price can not be less than the highest of the following:

1. Closing Market Price one day preceding the date of the board meeting in which the company resolves to delist from the Exchange
2. 3-year Average Market Price one day preceding the date of the board meeting in which the company resolves to delist from the Exchange (using Closing Market Prices)
3. Intrinsic Value Per Share on the basis of the revaluation of assets of the company.
4. P/E Multiple approach (for profitable companies)
5. The maximum price at which the Sponsors had purchased these shares from the open market in the preceding one year.

Accordingly, the highest price will likely be the 3-year Average Market Price, which is around Rs222 per share.

Price per share (in Rs)

It is pertinent to note that the PSMC's intrinsic value of Rs122.6 per share does not reflect updated valuations of underlying assets such as land, which will need to be revalued.

Moreover, the maximum possible closing market price one day preceding is determined under the assumption that the stock will experience a 7.5% gain in all four of the remaining trading sessions.

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