A group of investors led by a Chinese company Shandong Ruyi Science and Technology Group, who were to acquire Masood Textile Mills Faisalabad-based, vertically-integrated textile manufacturing company with in-house yarn, knitting, fabric dyeing, processing, laundry and apparel manufacturing facilities has withdrawn the public announcement of its intention to acquire up to 52% shares of Masood Textile Mills.
Both, the sellers and the acquirers have decided not to pursue the sale/purchase transaction any further and to mutually terminate the Share Purchase Agreement (SPA). This transaction was would have brought foreign investment in the order of Rs6 billion.
The conditions required to be fulfilled under the SPA between the sellers and the acquirers have not been fulfilled for proceeding with the acquisition transaction within the agreed timelines, the completion of the transaction is no longer possible under the terms of the SPA, said a notice sent to the Karachi Stock Exchange (KSE) on Tuesday.
The group of acquirers, namely Shandong Ruyi Science and Technology Group, Shahid Nazir Ahmad and Nazia Nazir, had made the public announcement of their intention to acquire a majority stake in the company on December 10, 2013.
It had received the approval from the Competition Commission of Pakistan (CCP) along with a separate approval from the Ministry of Commerce of China to go ahead with the acquisition.
The acquirers had also received clearance required under the Chinese law for overseas investment from the National Development and Reform Commission of China as well as the State Administration of Foreign Exchange.
The time period prescribed by the Securities and Exchange Commission of Pakistan (SECP) for undertaking the public offer was going to expire on October 5.
It posted a pre-tax profit of Rs1.1 billion in 2013, which was 13% higher than its pre-tax earnings in the preceding year.
Masood Textiles Mills produces value-added textile products, whose exports to the European Union (EU) are expected to increase due to the GSP Plus status that Pakistan has received.
According to some analyst, unending political instability in Islamabad may have been one of the many reasons for the withdrawal of the investment offer from the Chinese group. While it is also said that the sellers expected to fetch an offer of $2 per share, which the acquirers failed to make.
It would have been the first-of-its-kind deal in Pakistan had the Chinese group acquired a majority stake in a local textile company. Besides the duty-free access to the EU under the GSP Plus status, the Chinese group perhaps wanted to take advantage of better cotton prices and cost-effective labour by investing in a Pakistani company.
The share price of Masood Textile Mills has seen significant ups and downs for the last one year.
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