Equity Analysis /
Pakistan

ICI Pakistan: Partial divestment from Morinaga

  • Total consideration for the 26.5% stake in Nutrico is estimated c PKR 9.5bn, with a one-off gain for ICI of c PKR7.4bn

  • ICI has received a conditional offer from Morinaga Milk, Japan to acquire approximately 33.3% of (NMPL) for US$56.6mn

  • We believe a non-cash event of PKR1.6bn gain will be realized once the remaining 24.5% holding.

Intermarket Securities
14 July 2022

ICI Pakistan Limited (ICI) has received a conditional offer from Morinaga Milk, Japan to acquire approximately 33.3% of NutriCo Morinaga Limited (NMPL) for US$56.6mn. ICI owns 51% of NMPL and its Board of Directors have granted in-principal approval to move forward with divestment of 26.5% only, keeping the remaining 24.5%

The total consideration for the 26.5% stake in Nutrico comes to an estimated c PKR 9.5bn, with a one-off gain for ICI of c PKR7.4bn (details in table below). ICI may choose to deploy the proceeds into existing operations or an acquisition (ICI has a recent history of inorganic growth, with the latest project being a JV for Tariq Glass’s float glass expansion. The second, less likely option, is to give a one-time healthy cash payout to transmit cash to LUCK and other shareholders. We believe a non-cash event of PKR1.6bn gain will also be realized once the remaining 24.5% holding is marked-to-market at US$2.07/share upon the conclusion of transaction.