ICI Pakistan Limited has received a conditional offer from Morinaga Milk Industry Co. Ltd, Japan to acquire an aggregate of approximately 33.3 percent of the issued and paid-up share capital of NutriCo Morinaga (Pvt) Limited (NMPL), a subsidiary of ICI Pakistan, from NutriCo Morinaga’s existing shareholders at an aggregate price of USD 56.6mn translating into PKR 430.48/share.
The acquisition is valued at $56.6 million, or approximately $2.07/- per share, according to ICI Pakistan’s notice to the Pakistan Stock Exchange (PSX) on Thursday.
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NMPL was a joint venture between ICI Pakistan, Morinaga Milk and Unibrands (Private) Limited to locally manufacture and distribute nutritional formula products and was recently merged with NutriCo Pakistan (Private) Limited, which was involved in the import and distribution of select products of Morinaga Milk.
As per the notice, Board of Directors of ICI Pakistan has granted an in-principle approval to ICI Pakistan to move forward with the proposed sale/ divestment of 26.5% of its shareholding in NMPL (i.e. partial divestment) to Morinaga Milk, subject to, inter alia, valuation of NMPL and the finalization of definitive agreements, to be presented to the Board of Directors for formal/final approval, if deemed fit by the Board.
Moreover, ICI Pakistan has also been authorized to enter into a memorandum of understanding for the proposed transaction.
It is mentioned in the notice, “The offer from Morinaga Milk is a testament to Morinaga Milk’s confidence in the Pakistan market and the potential of NMPL to grow and cater to the growing nutritional needs of the children of Pakistan.”
In addition, “As the owners of the ‘Morinaga’ brand, know-how to manufacture the products along with its superior research & development facilities, Morinaga Milk is well-equipped to accelerate the growth of NMPL with the support of ICI Pakistan as a continuing joint venture partner (which shall continue to hold approximately 24.5% of the share capital of NMPL upon the completion of the proposed transaction).”
Furthermore, Moringa Milk Industry stated in its filing to the Tokyo Stock Exchange that the company has been exporting infant and toddler milk to Pakistan since 1978 and recognizes the South Asian country as an appealing market, having the world’s fifth-largest population with continued population growth forecast.
By acquiring management control over NutriCo Morinaga and ensuring the timely introduction of safe and high-quality products to meet customer needs in the Pakistan infant and toddler milk market, the Company considers that it will be able to capture growth opportunities, leading to the further development of the Morinaga Milk Industry brand infant and toddler milk business in Pakistan and contributing to the growth and health of the consumers of the Company products.
It has therefore resolved to conclude a memorandum of understanding to acquire shares of NutriCo Morinaga (making it a subsidiary of the Company), subject to the successful negotiation, execution, and delivery of definitive agreements.