Paper Processing to issue shares at 1:2 ratio for merger with Magura Paper
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Listed Paper Processing & Packaging is going to merge with its non-listed sister concern Magura Paper Mills, with shares of the latter to be exchanged at a 2:1 ratio.
After the merger, the ownership stake of sponsor-directors will increase from 35 per cent in the listed company to 75 percent in the new entity out of the merger.
On the other hand, the ownership of general shareholders and institutional shareholders will be reduced from 65 per cent to 24.78 percent.
The Paper Processing manufactures paper and paper products whereas non-listed Magura Paper Mills produces kraft liner and fluting medium required for manufacturing corrugated cartons.
Both the companies are sister concerns of Magura Group.
The merger has already been approved by the High Court and the securities commission.
On Sunday, the listed company declared the exchange ratio of the merger. According to the disclosure, 1 share of Magura Paper Mills will be converted into 0.50 share of Paper Processing.
According to the company, the amalgamation will bring management efficiency and reduce overhead cost. It is also expected to improve turnover of the company.
Currently, Paper Processing has 11.29 million shares, of which 35 per cent is owned by sponsor and directors. For merger, the company will issue another 18.32 million shares in favour of Magura Paper Mills.
Post-merger shares will be 29.60 million.
As the owners of both the companies are same, the sponsor-directors' stake will increase.
After the disclosure, the share price of the Paper Processing fell by Tk 3 to Tk 176.50 on Sunday.