KARACHI: Shanghai Challenge Textile Company Limited, a Chinese firm, has taken up 24.36pc stake in Masood Textile Mills Limited (MSOT) through the purchasing 14.6m shares.
The Faisalabad-based company MSOT is a profitable company, which has been paying dividends to shareholders at a uniform rate of 15.5pc for each year from 2011 to 2013. The share of MSOT hit the upper lock on Monday on the KSE as its share closed at Rs128.15 after increasing by Rs6.10, or 5% of its opening rate. The company’s total assets stood at Rs19.3 billion at the close of FY13. Against the paid-up capital of Rs995m, the company held Rs4.11bn in reserves, which produced the break-up value per share of par value Rs10 at Rs51.33.
Masood Textile Mills was in talks with another Chinese group – Shandong Ruyi Science and Technology Group – for the sale of its majority shareholding. 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. But the deal fell apart on September 30 when potential acquirers withdrew the public announcement of their intention to acquire up to 52% shares of Masood Textile Mills for undisclosed reasons.
It is the first-of-its-kind deal in Pakistan in which a Chinese group has acquired a majority stake in a local textile company. Besides the duty-free access to the European Union under the GSP Plus status, the Chinese investors will have the advantage of better cotton prices and cost-effective labour by investing in a Pakistani company.