Pak Suzuki Motor Company Ltd (PSMC) is thinking about leaving the Pakistan Stock Exchange (PSX) because its biggest owner wants to buy out the smaller shareholders. The Japanese car company has said it will discuss this proposal in a meeting on October 19.
Due to this news, PSMC’s stock price went up by 5.47% to Rs143.44, as investors rushed to buy shares in hopes of getting a higher price during the delisting process.
The value of the company’s shares on the stock market is currently low because they have reduced imports and production due to a shortage of dollars in the country. However, the rules of the PSX specify five methods to determine the benchmark purchase price during a voluntary delisting. The lowest purchase price cannot be lower than the highest of these five benchmarks.
An analyst from Arif Habib Ltd, Muhammad Abrar, believes that the expected price for the voluntary delisting will be around Rs222.30 per share, which is the average price over the last three years.
Currently, 26.5% of the company’s shares can be easily traded by the public. At a price of Rs222.30 per share, the total transaction value would be Rs4.8 billion.
The other four methods for determining benchmark prices include the average market price over the last five days (Rs133.20 per share), the estimated net realizable value of assets (Rs122.70 per share), the price-to-earnings ratio (which doesn’t apply because the company is losing money), and the price at which the major shareholder bought the company’s shares from the open market in the previous year (which also doesn’t apply here).
