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KARACHI: Shell Pakistan Ltd (SPL) said on Tuesday it has received a public announcement of intention from Saudi Arabia-based WAFI Energy LLC to buy up to 77.42 per cent of its shares, which are currently held by the oil firm’s foreign sponsor.
The potential acquirer is a Saudi retail gas station network and a sole licensee of Shell retail pumps in the Gulf nation.
Earlier in June, SPL told investors that its foreign sponsor planned to divest its entire 77.42pc stake in the oil marketing company (OMC) as part of “simplifying” its global portfolio.
Shell Petroleum Company Ltd, which is a subsidiary of Shell plc, is currently the single largest shareholder in the Pakistani firm. The general public owns 15.2pc shares while the rest is controlled by public-sector companies, banks and mutual funds etc.
Takeover regulations require that any share purchase agreement with a majority shareholder must follow a public offer to help small investors take advantage of the deal. Therefore, the second leg of the acquisition will consist of a public offer for half of the remaining shareholding in SPL that’s currently held by minority investors.
As such, the potential acquirer will make a public offer for 11.29pc shareholding in the target company at an equal or higher share price than the one quoted to the foreign sponsor for its majority stake.
At the going market rate of Rs163.92 a share, the value of the foreign sponsor’s entire shareholding in the OMC is around Rs27.1 billion.
The sale of the sponsor’s shareholding in SPL will include its downstream business as well as a 26pc stake in Pak-Arab Pipeline Company Ltd.
In July, Pakistan Refinery Ltd and Air Link Communication Ltd also expressed their interest in jointly buying majority shares of SPL. Last month, Bloomberg News reported that the world’s largest oil company Saudi Aramco is exploring the possibility of making a bid for SPL. Similarly, British investment firm Prax Overseas Holdings Ltd also expressed interest in buying the local OMC.
SPL posted a net profit of Rs6.4bn for the January-September period, up 125.2pc from a year ago.
SPL is the third-largest OMC with a share of roughly 7.1pc in volumetric sales recorded in the first quarter of 2023-24. Its volumetric sales in July-September dropped 15pc year-on-year to 272,000 tonnes.