AHBL share tender offer
The market is expecting from the new owners of Arif Habib Bank Limited (AHBL) a ‘tender offer’ for the minority shareholding at a price of Rs9 per share before Dec 27, 2009. Suroor Investments had signed an agreement with AHBL on June 30, 2009 for acquisition of major shareholding (59.4 per cent) at that price. The public announcement was made on July 1.
A report released by brokerage firm, Topline Securities, on Monday explained that the Takeover Ordinance in Pakistan was promulgated in 2002, called Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance 2002.
According to that document, all listed companies acquiring more than 25 per cent shares were obligated to make a public announcement of offer of minority stake as well, mainly to provide fair and equitable treatment to all shareholders.
The rules, first issued in 2002, have since seen several amendments.
But in compliance with the latest regulations issued through notification (dated Aug 29, 2008), the acquirer of majority stake in a company has to make a public announcement within 180 days of announcing the intention to acquire the control of the target company.
The SECP for a genuine reason can extend that time by 90 days. And the acquirer is bound to buyback at least 50 per cent of the remaining stocks offered. The rules also stipulated that the public offer price should not be less than the acquisition price or higher price arrived through few other formulas as mentioned in the regulation.
Analysts at Topline Securities calculated that since the agreement between Suroor Investments and Arif Habib Bank was signed on June 30, 2009 and the public announcement was made on July 1, to comply with the regulation, ‘a public offer has to be made within 180 days which according to our calculation is expiring on Dec 27, 2009.’
They reckoned that Suroor would have to acquire two, out of four minority shares, presented on tender offer. ‘After the announcement of acquiring more than 25 per cent shares, the public offer has to be issued within six months as explained before. The payment to shareholders who will tender their shares has to be made within three months. Thus, the whole process has to be completed in about nine months after the announcement of acquisition.
‘In case of AHBL, six months have already gone by and now after the official public offer is made, the minority shareholder who will accept the offer will get money back by March 2010, unless some changes in timeframe are approved by the SECP for a valid reason,’ said the Topline analysts.
In anticipation of the tender offer, the turnover in AHBL has received a big boost. Although a small and relative inactive stock, it was the heaviest traded scrip last Friday and saw fifth highest volume of 10 million shares on Monday.
Analysts at Topline explained that investors took heart from earlier similar offers in case of PPTA and Bosicor Refinery.