As was unveiled in April this year by its French majority stakeholders, the Lafarge SA Coppée (LSC) sold its cement operations in Pakistan to one of Britain’s top business groups – Bestway Cement (BWCL).
The equity analysts and the bourse itself reacted positively as the two sides clinched the multimillion dollars deal that saw LSC divesting its controlling 75.86 per cent shares in Lafarge Pakistan Cement (LPCL). The enterprise value of the deal stands at $ 329 million or Rs 33 billion in rupee terms, as was notified by the parties to the front regulators at Karachi Stocks Exchange (KSE).
The market analysts see the per share price for the deal ranging from Rs 19.50 to Rs 20 depending on the prevailing rupee-dollar parity standing on Thursday at Rs 98.60 and Rs 98.7, respectively, on the kerb and interbank markets.
“The BWCL would buy 76 per cent stake for $ 218 million translating into price per share of close to Rs19.50,” said Vahaj Ahmed of Topline Securities. This takeover, the analyst said, was closed at $ 137 per ton compared to the Topline Cement Universe average of $110 per ton.
The analysts at Shajar Research have calculated the deal to translate into per share acquisition price of around Rs 20 at the current foreign exchange levels after the adjustment of debt factor. The market observers believe that the LPCL’s stakes currently were trading at an “expensive” 2014E PE of 12.7x.
Vahaj, however, said the scrip’s price would remain strong due to tender offer. As per regulations, he said, the tender price had to be at least the acquisition price – Rs 19.5 per share.
Thus, an investor could make annualised gain of eight per cent from current levels assuming 70 per cent shares were accepted in the tender and he/she can sell the remaining 30 per cent at LPCL’s fair price – Rs 12 per share, he added.
It may be recalled that in April this year the LPCL had announced that Sofimo SAS, its fully-held parent company, was intending to evaluate a potential divestment of its 75.86 per cent indirect holding in the Lafrage Pakistan. DG Khan Cement (DGKC), besides BWCL, had bid and was short listed by the French sellers for final evaluation.
Analysts at Shajar Research believe that the development would have positive implications for the DGKC which stood at four position among the top 10 best performing scrips on Thursday at KSE. The LPCL topped the list by having about 59 million of its listed shares exchanging hands on the day. The newly-acquired scrip gained 13 paisas after opening at Rs 16.60 and closing at Rs 16.73.
The Karachi bours remianed almost flat by gaining 9.3 points to close at 30,474.75 points against Wednesday’s 30,465.43 points. Equity analyst Ahsen Mehanti views that along with other factors the fresh acquisition played a catalyst role in Thursday’s bullish sentiments at KSE. About the day’s market performance, Mehanti, a director at Arif Habib Corporation, said stocks closed flat amid higher trades ahead of Ramazan (Eid) holidays this weekend. “Sentiments remained positive on major earnings due after Eid despite below expected earnings of Fauji Fertilizer on low urea sales announced today impacting sector outlook,” he said.
Founded by Sir Mohammed Anwar Pervez nearly 30 three years ago, Bestway Cement Limited is part of the Bestway Group of the United Kingdom being UK’s second largest cash and carry operator in terms of turnover with group annual turnover in excess of $ 3.6 billion. The BWCL is the second largest cement producer in Pakistan and joint owner of the country’s third largest bank, United Bank Limited.