MERGER OF PAKCEM

LIMITED (PAKCEM) WITH

OR INTO AND BESTWAY
CEMENT LIMITED (BWCL)

Presented by:
Tayyaba Fatima
Maaz ali khan
Hassan askari
INTRODUCTION
o Pakcem and BWCL are two of the largest cement manufacturers in Pakistan.
oPakcem Limited manufactures and sells cement in Pakistan and was incorporated in 1993
oThe share price is Rs.21.33 (As of Wed, Feb 15, 2017 5:00 PM)
oBestway Cement Limited is a public limited company incorporated in Pakistan on 22 December
1993
o Company is a subsidiary of Bestway International Holdings Limited (BIHL), which holds
56.43% shares in the Company.
oThe share price is Rs.168.58 (As of Tue, Oct 17, 2023 4:04 PM)
o The two companies merged in 2016 to create a larger and more efficient cement company.
 HISTORY OF THE
MERGER
oPakcem Limited stands fully amalgamated with and into Bestway Cement Limited. This was in pursuance
of Scheme of Amalgamation approved by the Islamabad High Court, dated August 22, 2016.
oPakcem and Bcl belong to bestway group of companies and interlinked as parent and subsidiary
oPrime objective is to conduct the business as unified entity under one management and achieve saving
through economies of scale and synergies.
oMajority of directors of the two companies are same so the interest of shareholder is not affected post –
merger also one unified board will be better able to dedicate its time and efforts to run company efficiently
owhereas Some shareholders of Pakcem opposed the merger, arguing that it would undervalue Pakcem's
assets. However, the merger was ultimately approved by the shareholders of both companies.
300 million
 Market share price
Market prices of both companies before and after
Market capitalization the merger are as follows:
Pakcem:
PAKCEM merged with BWCL because of higher
capitalization. Closing price on April 6, 2016 (before merger
announcement): PKR 21.00
At time of merger 2016 , Bestway Cement
Company has a market capitalization of PKR Closing price on July 8, 2016 (after merger
100.04 billion. completion): PKR 19.10

While Pakcem has a market capitalization of PKR Bestway Cement:

95.4 billion. Closing price on April 6, 2016 (before merger
announcement): PKR 162.00
EPS of BWCL: Closing price on July 8, 2016 (after merger
Before : RS 20.16 completion): PKR 176.62
After: RS 22.29
 Actual reason of merged

o The actual reason why Pakcem merged with

Bestway Cement Company was to achieve
economies of scale and synergies, which would
enable the combined entity to run its business
more efficiently and effectively.

o another main reason of this merger is to get

management expertise in which PAKCEM is
lacking.
 POSITIVE PHASES FOR THE
MERGER
Economies of scale: The merger created a larger and more efficient cement company, which
was able to achieve lower costs through economies of scale.
 Synergies: Pakcem had a strong presence in the North of Pakistan, while BWCL had a strong
presence in the South. The merger allowed the two companies to combine their sales and
distribution networks, and to optimize their production facilities.
 Streamlined management: The merger eliminated the need for two separate management
teams, which resulted in lower costs and greater efficiency.
Operational flexibility: after merger firm had multiple production facility which enables a
company to meet its customer demand and also company able to continue it supplies if one
plant is closed for maintenance or forced stoppages .
Larger Equity and asset base : would enables a company to have wider access to external
source of funds at more competitive rates facilitating the unified entity in pursuing future
avenues of growth.
Better risk absorption capacity: the merged companies have better risk absorption capacity as
the company will able to respond and adapt various changes more smoothly and effectively as
compared to competitor.
Increased market share: Best way Cement will now be one of the largest cement
manufacturers in Pakistan, with a strong presence in all key markets. This will give the
company a competitive advantage over rivals.
Efficient utilization of assets: would able to leverage each other resources pool and expertise in order to optimize
the assets more efficiently.
 Store , spare and consumables: though merger the store facilities will be integrated thus reduce the need to
maintain the independent inventory .in short lower the working capital requirement.
 Stronger negotiating capability: merged companies have stronger negotiating power which result in saving
through more competitive commercial term for various input.
Administrative workload and resource consumption: the merger would save the administrative cost and leading
to enhance profitability as after merger entities carry out business transactions with commercial banks through
single operation accounts, beside it administration , human resource , treasury and MIS department will also be
managed with one set of management and staff.
 IMPACT OF THE MERGER

• The merger has had a positive impact on both Pakcem and BWCL. The combined company is now
the largest cement manufacturer in Pakistan, with a production capacity of 8 million tons per annum.
The merger has also resulted in significant cost savings and synergies.
• The merger has also had a positive impact on the Pakistan cement industry as a whole. The creation
of a larger and more efficient cement company has led to lower prices for consumers.
• Overall, the merger of Pakcem and BWCL was a successful transaction that has benefited both
companies and the Pakistan cement industry as a whole.
 CONCLUSION:

Overall, the merger of Pakcem and Bestway Cement was a strategic move that is expected to
benefit both companies and their shareholders. In addition, the merger created a stronger and more
competitive cement company in Pakistan. Bestway Cement is now the second-largest cement
manufacturer in the country, with a total production capacity of 12.9 million tones per annum.
REFERENCE:
o https://dps.psx.com.pk/company/BWCL
ohttps://www.investing.com/equities/lafarge-pak-company-profile
o https://dps.psx.com.pk/download/document/079862.pdf
ohttps://bard.google.com/share/0e0c1d07e032?hl=en
ohttps://www.cemnet.com/News/story/158943/pakistan-amalgamation-of-bestway-ce
ment-and-pakcem-complete.html