Fauji Fertilizer Company Limited (FFC) and Fauji Fertilizer Bin Qasim Limited (FFBL) held a board meeting today, giving in-principle approval to evaluate a potential merger scheme of arrangement.

Both companies will appoint advisors to evaluate the proposed amalgamation, after which the findings will be presented to the respective boards for consideration.

The notice has not disclosed details of the amalgamation.

FFC currently has 1,272mn outstanding shares, while FFBL has 1,291mn shares.

FFC has an annual capacity of 2.04 million tons of urea, while FFBL’s urea and DAP capacity stands at 0.55 million tons and 0.65 million tons, respectively.

Post-merger, the total capacity of the merged entity is expected to be 2.60mn and 0.65mn tons of urea and DAP, respectively, we view.

As a combined company, the entity is projected to have a leading market share in urea and DAP of ~43% and ~60%, respectively.

As of March ’24, the book value of FFC and FFBL is PKR 52.84/share and PKR 23.32/share, respectively.

Courtesy- AHL Research