Dilmah Ceylon Tea Company PLC (Dilmah) will be issuing new shares to its parent company MJF Teas (Private) Limited (MJFT) to acquire all value-added tea export operations of the MJF group for Rs.442.5 million.
Dilmah in a stock market disclosure said that the move would improve economies of scale and streamline processes to increase efficiency, increase Dilmah’s annual turnover and provide opportunity for the firm to increase its global reach.
Dilmah will issue 737,500 new shares for a consideration of Rs.600 per share to acquire the remaining value-added tea export operations of MJFT already not under Dilmah.
During Dilmah’s first quarter ended June 30, 2017, its highest market price per share was Rs.660, while the lowest was Rs.600. However, according to the Colombo Stock Exchange, Dilmah’s shares last traded at Rs.564.
Dilmah’s net asset per share at the end of the June quarter was Rs.525.92.
The group’s profits for the quarter more than doubled to Rs.403.31 million from Rs.188.19 million year-on-year (YoY). Earnings per share had increased to Rs.20.17 from Rs.9.41 YoY.
Ceylon Tea prices had recovered over the past year, along with decline in output due to weather-related issues.
Following the private placement, MJFT’s shareholding in Dilmah will increase to 66.61 percent, compared to the current 65.38 percent. However, related parties own most of Dilmah shares, since the public shareholding in the company is just 12.81 percent, of which 7.89 percent is owned by the Employees’ Provident Fund.
The private placement will be subject to relevant regulatory and shareholder approvals.