Several major players from the ceramic sector, namely Cerat Cement Company Limited and Shirazi Investments (Private) Limited, have entered the Pakistani agro-based market by expressing their intention to acquire up to 75.69% stake in Rafhan Maize Products Company Limited (RMPL), a leading agricultural company. The major players’ entry into the market marks a significant development in the Pakistani agricultural sector. As illustrated below:

Key Players and Stake Acquisition

• Cherat Cement Company Limited (CCCL) and Shirazi Investments (Private) Limited propose to acquire up to 6,991,052 shares or 75.69% of RMPL’s paid-up capital.
• Cerat Cement will directly acquire up to 3,495,526 shares (37.845% of RMPL’s paid-up capital) and Shirazi Investments will acquire an equal amount.

Background and Significance

Rafhan Maize Products Company Limited is a prominent agro-based company, and this acquisition is anticipated to have significant implications for both the cement and agricultural sectors. The acquisition is part of the companies’ strategic expansion efforts in the Pakistani market.

• Cerat Cement Company Limited is publicly listed on the Pakistan Stock Exchange and engages in cement manufacturing with a state-of-the-art production infrastructure.
• Shirazi Investments (Private) Limited operates as the investment arm of Atlas Group, a diversified conglomerate with various sectors such as engineering, power, finance, and trading.

Regulatory Approvals and Timeline

The proposed acquisition is subject to the receipt of regulatory and other approvals. The companies have proposed a Share Purchase Agreement (SPA), under which they will acquire shares directly from existing shareholders.

• The number of shares they may offer to buy from the public is “not determinable at this stage” and will be determined after the SPA is signed.
• The acquisition will be completed subject to regulatory approvals and other conditions, if any.

Objectives and Implications

The proposed acquisition aims to enhance the strategic capabilities of Cerat Cement Company Limited and Shirazi Investments (Private) Limited, expanding their presence in the Pakistani market.

• The acquisition will provide Cerat Cement with a significant presence in the agricultural sector, complementing its existing cement manufacturing business.
• Shirazi Investments will benefit from increased operational capabilities in the agricultural sector.

Management Engagement

The following stakeholders will be engaged in the proposed acquisition:

• Topline Securities Limited (Manager to the Offer) will play a key role in the proposed acquisition.
• Cerat Cement Company Limited and Shirazi Investments (Private) Limited will be the parties involved in the acquisition.

Expert Insights

“It is a strategic move by both companies to expand their presence in the Pakistani market. With the acquisition, Cerat Cement will have a strong foothold in the agriculture sector, complementing its existing cement manufacturing business. Shirazi Investments will benefit from increased operational capabilities in the agricultural sector, enhancing its strategic capabilities.”

Topline Securities Limited

Conclusion

The proposed acquisition by Cerat Cement Company Limited and Shirazi Investments (Private) Limited in Rafhan Maize Products Company Limited is an example of strategic expansion efforts in the Pakistani market. The acquisition will provide both companies with significant benefits, enhancing their strategic capabilities and expanding their presence in the country.