CCP approves merger of Millat Equipment with Millat Tractors

The Competition Commission of Pakistan (CCP) has granted approval for the merger of Millat Equipment Limited (MEL) with Millat Tractors Limited (MTL) under a Scheme of Arrangement sanctioned by the Lahore High Court (LHC), a statement said on Thursday.

Upon the court’s sanction, MEL will be dissolved, and MTL will emerge as the surviving entity.

MEL has been responsible for manufacturing critical parts such as gears, shafts, hydraulic pumps, and engine balancers exclusively for Massey Ferguson 300 series tractors, which are assembled by MTL.

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The merger aligns with MTL’s strategy to streamline its operations, improve product quality, and enhance overall efficiency, the statement read.

According to Muhammad Abrar Polani, an analyst at AHL Research, the merger will provide MTL with significant economies of scale.

“The consolidation of operations will allow MTL to better optimise production processes,” Polani told Business Recorder.

The CCP’s assessment of the merger determined that it would not disrupt the competitive landscape in Pakistan’s tractor parts market.

Since MEL’s operations are focused solely on parts for the Massey Ferguson 300 series tractors, the merger is not expected to alter market share or create a dominant position.

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The commission said competition within the relevant market would remain unaffected by the transaction.

Osama Naeem, an investment analyst at AKD Securities Ltd., highlighted the impact of the merger on MTL’s financial position.

“Amid the pending approval of the MTL merger scheme with MEL, the company was unable to pay a dividend for FY24. However, it is widely anticipated that CCP approval will clear the path for the company to resume dividend payouts in the upcoming half-year results, contingent on approval from the LHC,” Naeem said.