Suzuki Motor Corp agrees to buy out Pak Suzuki at 50pc premium to delist from PSX

KARACHI: Suzuki Motor Corp has agreed to buy back the shares of its Pakistani subsidiary, Pak Suzuki Motor Co Ltd, at a 50 percent premium to its initial offer, paving the way for the delisting of the country's largest carmaker from the stock exchange.

The Japanese automaker, which owns 73.09 percent of Pak Suzuki, said on Thursday it would pay Rs609 per share to acquire the remaining stake, up from its previous offer of Rs406 in December.

The buy-back price was determined by the Voluntary Delisting Committee of the Pakistan Stock Exchange (PSX), which approved the delisting of Pak Suzuki, subject to the acceptance of the majority shareholder and the consent of the minority shareholders.

“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 PSX.

The company shared that the buy-back is "subject to purchase of at least 13,915,775 ordinary shares (62.84 percent) 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".

The SMC had originally proposed to purchase the shares representing 26.91 percent of the paid-up capital at a minimum purchase price of Rs406. Pak Suzuki, which has been operating in Pakistan since 1983, said in October it wanted to delist from the PSX due to its poor financial performance, lack of dividends, and low market valuation.

The company posted a net loss of Rs6.34 billion in 2022, compared with a profit of Rs2.68 billion in 2021. In the first nine months of 2023, it reported a loss of Rs5.87 billion, despite a strong recovery in the third quarter.

At the time, PSMC’s share price closed at Rs504.39, falling to its lower limit triggered by the purchase-price notice that day. 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 percent of the paid-up capital.

Pak Suzuki's share price has been volatile since the delisting announcement, surging from Rs205.94 rupees on Oct. 19 to a record high of Rs898.57 rupees on Jan. 11, before falling back to Rs613.01 rupees.

The buy-back offer is contingent on acquiring at least 13.92 million shares, or 62.84% of the total outstanding shares held by the minority shareholders. The company would announce the date and procedure for the tender offer in due course, after obtaining the necessary approvals from the Securities and Exchange Commission of Pakistan (SECP).