There has been a significant announcement from Suzuki Motor Corporation (SMC), the parent company of Pak Suzuki Motor Company Limited (PSMC), regarding their decision to purchase PSMC shares at a buy-back price of Rs609 per share. This is a notable increase from the original offer of Rs406 per share made in December.
The announcement was made through a notice to the Pakistan Stock Exchange (PSX) on Thursday, where SMC conveyed its acceptance under PSX Regulation No. 5.14.7.
The buy-back is contingent upon the acquisition of at least 13,915,775 ordinary shares (62.84%) out of the total 22,145,760 outstanding shares held by shareholders other than the majority shareholder. This condition is crucial for the delisting process, approved by the Voluntary Delisting Committee of the Exchange.
PSMC’s Strategic Decision
Originally, SMC, as the majority shareholder in PSMC, had proposed the purchase of shares representing 26.91% of the paid-up capital at a minimum price of Rs406 per share. This move had caused PSMC’s share price to close at Rs504.39, triggering its lower limit on the day of the purchase price notice.
The decision to delist from the stock exchange was formally announced by PSMC in October of the previous year. Various factors, including the company’s losses, lack of dividends, and undervaluation at the PSX, contributed to this strategic move.
PSMC reported a significant loss of Rs6.34 billion in 2022, with a loss per share of Rs77, in contrast to a profit of Rs2.68 billion in the previous year. Despite massive earnings of Rs3.8 billion in July-September 2023, the cumulative loss for the nine months of the year stands at Rs5.87 billion.
Suzuki Motor Corporation’s buyback decision marks a crucial step in reshaping the dynamics of its subsidiary, PSMC, and reflects the company’s commitment to addressing financial challenges and optimizing its position in the market.
