Islamabad Stock Exchange (ISE) has been approached by ACACIA Partners LP, investors in Unilever Pakistan for the last seven years with around 4.1 percent of the Unilever's outstanding shares, to stop Unilever from forcing minority partners to sell out their shares to them on their desired values. However, the ISE has not yet responded to their request to stop delisting of Unilever.
Secretary/Chief Operating Officer, ACACIA Partners, LP, Ahmad Noman in a letter sent to ISE on January 10, 2013 said: "We are writing to you because we believe the proposed going-private and de-listing of the company would, if approved, be a great tragedy for minority investors, the stock exchanges of Pakistan and the country overall."
They also posed some questions to the ISE, eg: How is such treatment of minorities good for the Exchange and for attracting future investments? If it is good for minorities, then why aren't minority shareholders being asked to approve the transaction? How is such treatment of minorities good for Pakistan? Won't the de-listing of Unilever Pakistan deprive Pakistan of transparency from a benchmark corporate, and possibly affect tax revenues (as royalties and other charges are used by private companies to shift profits to global tax havens)? Won't such a prime delisting set an important precedent leading to a wave of such transactions? Won't such a wave of delisting that is inconsiderate of the voice of minority shareholders discourage investment in Pakistan? Doesn't Pakistan need to foster an environment that is conducive to long-term investments and friendly to long-term investors?
"We believe", the letter said that the answer to all these questions "would lead you to deny the company's application for de-listing and allow us to remain committed investors in Pakistani companies. Our ACACIA Partner funds manage US$. Four billion as part of a firm with US $19 billion of assets under management, invested on behalf of many individuals, charities, endowments and foundations. We are known as very long-term passive shareholders in some of the world's best businesses. We are pleased to have been investors in a number of wonderful Pakistani businesses since the mid-1990s. Our current investments in Pakistan have a value of approximately US $75 million."
Unilever that already owns 75 percent of the total shares is now desirous to extend their control over at least 90 percent shares. The point of concern is that sensing heavy profits ahead they are trying to use every tactic to coerce the minority partners to shed their shares on market price and reap the benefit later in shape of exorbitant prices of their share and heavy profits.
ACACIA wrote this letter believing the proposed going private and delisting of the company would, if approved, be a great tragedy for minority investors, the stock exchanges of Pakistan and the country overall. Approval of this delisting and the wave of others that would likely follow, would deprive Pakistan of transparent, benchmark listed corporate entities, deprive future pension and insurance company investors of excellent long-term investments and it would slaughter the image of the country's regulatory infrastructure.
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