Pakistan Refinery Ltd (PRL) and Air Link Communication Ltd have expressed their interest in acquiring majority shareholding and control of Shell Pakistan Ltd, the third-largest oil marketing company (OMC) in Pakistan.
The foreign sponsor of Shell Pakistan put up a 77.42% stake for sale in June as part of its global portfolio simplification. Initially, the two acquirers are targeting this stake, and the second phase of the acquisition will involve a public offer for up to 50% of the remaining shareholding held by the general public, public-sector companies, banks, and mutual funds.
The acquirers will be required to extend a public offer for the 11.29% shareholding in Shell Pakistan after reaching a deal with its current sponsor at an equal or higher share price. At the current market rate of Rs115.05, the foreign sponsor’s shareholding in the OMC is valued at approximately Rs19 billion.
The exact shareholding being targeted by PRL and Air Link Communication was not mentioned in the regulatory filing. PRL is one of the five refineries operating in Pakistan, and Air Link Communication is a publicly listed distributor, manufacturer, and retailer of smartphones.
Pakistan State Oil Company Ltd (PSO), which holds over half of the market share among all OMCs, also owns 63.5% shareholding in PRL. The deal goes through, the largest OMC, PSO, will absorb the business of the third-largest player, further solidifying its dominant role in the oil marketing industry.
Some believe the deal may face resistance from the Competition Commission of Pakistan (CCP), while others expect no regulatory intervention, given that the move was initiated by the state-owned PSO.
Analysts have differing views on the acquisition, with some suggesting that the government should focus on selling the companies it owns instead of buying private companies through state-owned enterprises.