Pakistan Refinery Limited (PRL) and Air Link Communication (AIRLINK) have expressed their interest in acquiring a majority stake and control of Shell Pakistan Limited, according to brokerage house Next Capital Limited. In a notice to the Pakistan Stock Exchange (PSX) on Monday, Next Capital Limited, appointed as the manager to the offer, shared the development.
The notice stated, “Next Capital Limited (Manager to the Offer) has submitted a Public Announcement of Intention (‘PAI’) on behalf of Pakistan Refinery Limited (PRL) and Air Link Communication Limited (Air Link) on July 17, 2023, to acquire 77.42% shares and control of Shell Pakistan Limited by PRL and Air Link under the Securities Act, 2015 and the Listed Companies (Substantial Acquisition of Voting Shares & Takeovers) Regulations, 2017.”
As per the PSX notice, the two companies intend to acquire 77.42% (165.7 million shares) through an agreement and another 11.29% (24.16 million shares) through a public offer. This amounts to a potential total acquisition of 88.71%.
Analysts have noted that the 77.42% share refers to the stake offered by Shell Plc, the parent company of Shell Pakistan Limited. According to PSX regulations, if a company intends to acquire over 30% stake in another company, it must also offer to acquire shares from minority shareholders, which roughly translates to half of the total free-float.
PRL is one of the five refineries operating in Pakistan, engaged in the production and sale of petroleum products. It is a subsidiary of Pakistan State Oil Company Limited. On the other hand, Air Link Communication is one of the leading smartphone distributors, manufacturers, and retailers in the country, with a nationwide network.
In June, Shell Pakistan Limited had announced that its parent company, Shell Petroleum Company Limited (SPCo), had notified its intent to sell its shareholding in SPL. The announcement did not disclose the amount of shareholding SPCo intends to sell, but it had a 77.42% stake in SPL as of December 31, 2022, according to the annual report. The company statement mentioned that the oil giant was receiving strong interest from international buyers.
SPL, a subsidiary of Shell Petroleum Company Limited, United Kingdom, is involved in marketing petroleum products, compressed natural gas, and various kinds of lubricating oils. Despite the ongoing economic crisis in the country, SPL’s financial performance for the first quarter of 2023 was severely impacted, resulting in a loss of Rs4.6 billion compared to a profit after tax of Rs2 billion in the same period last year.
The potential acquisition of Shell Pakistan Limited by PRL and Air Link Communication marks a significant development in the energy sector of Pakistan, and further details regarding the deal are expected to unfold as the process progresses.