In a deal estimated at $1.77 billion, the Shanghai Electric Power Company Limited is set to acquire a controlling stake in K-Electric from the Abraaj Group which is based in Dubai. The reaffirmation comes at a time when doubts had been poured on the deal by many people owing to its size and other factors.
On Wednesday, the Pakistan Stock Exchange (PSX) received a notification from Muhammad Rizwan Dalia, the K-Electric Director Finance, and Company Secretary; stating that the K-Electric had received a copy of the fresh intention by the Shanghai Electric Power Company Limited to acquire either directly or indirectly 66.40% of the voting shares of K-Electric Limited. The deal would see the Shanghai Electric Power Company Limited pay $1.77 in exchange for the stake in K-Electric Limited which is currently owned by the Abraaj Group from Dubai.
The previously submitted public intention of announcement (PoI) lapses on the 30th of June hence the need arises to make a fresh resubmission.
While this news is good for investors of both companies, the shares of K-Electric responded negatively to the news by recording a 3% drop on the Pakistan Stock Exchange. That meant it dropped by an equivalent of Rs 0.20 to a close price of Rs 6.77. The number of K-Electric shares traded was 7.59 million which is still an impressive number.
While the resubmission of the public intention of the announcement was not a revision of the price of the acquisition, rumors were in circulation that the Shanghai Electric Power Company Limited could revise lower its offer given the amount of debts the K-Electric company had with its debtors among them the Sui Southern Gas Company.
K-Electric is a major supplier of electric power having acquired the exclusive right to generate, distribute and transmit power around Karachi and the surrounding areas. At the moment, at least 2.5 million consumers are being served by the K-Electric company. The 66.40% stake in the K-Electric company that Shanghai Electric Power Company Limited intends to acquire was bought by the Abraaj Group a while back.