LAHORE: Nishat Mills Limited is walking away from the dairy business entirely, offloading its 49.10% stake in Nishat Sutas Dairy Limited to its Turkish joint-venture partner at a proposed consideration of just Rs5 per share a retreat the textile giant attributes to tough market and regulatory conditions squeezing Pakistan's dairy sector.
The board approved the exit at an emergent meeting, deciding the divestment serves the best interest of the company and its shareholders after what it called due deliberation on prevailing market and regulatory conditions.
A Joint Venture Unravels
Nishat Sutas Dairy Limited began life as a partnership between Nishat Mills and Sütaş Süt Ürünleri A.Ş., a major Turkish dairy company. Nishat Mills currently holds 49.10% of the venture's paid-up share capital. Now the textile major wants out completely, selling its entire shareholding to Sutas, the same partner it built the business with.
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Why Rs5 a Share is the Real Story
The company establishes the exit price but stops short of explaining the arithmetic behind it. It doesn't disclose Nishat's original investment cost, the current carrying value of the stake, NSDL's latest financial position or the methodology behind the Rs5 price. Those numbers matter because they would reveal whether Nishat is exiting at a significant write-down and how much value the dairy bet ultimately created or destroyed. For now, the disclosure gives investors the exit price, but not the full financial cost of the exit.
Sutas Steps in to Keep it Running
Sutas has already signaled it wants to keep the operation alive. The Turkish company expressed willingness to acquire Nishat's stake and continue operating NSDL, subject to signing definitive transaction agreements and clearing the necessary regulatory approvals.
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Nishat Mills frames the deal as more than a simple exit. The company says the transaction would encourage continued participation of foreign investors in Pakistan's economy and demonstrates the continued commitment of a foreign strategic investor to Pakistan's dairy sector and economy language aimed at reassuring markets that a Turkish multinational isn't abandoning ship, even as its local partner does.
Shareholders get The final Say
The deal isn't done yet. It still needs approval from Nishat Mills' own shareholders, along with compliance with all requisite legal and regulatory formalities, including execution of definitive transaction agreements. Nishat entered Pakistan's dairy business alongside Sutas. Now it wants out completely, leaving its Turkish partner holding the keys and investors asking what went wrong with the original bet.