Akij Resources to Acquire 30% Stake in Dominace Steel for Tk 40 Crore
Dominace Steel Building Systems has applied to the Bangladesh Securities and Exchange Commission (BSEC) to transfer its share ownership. The promoters and directors of the loss-making, publicly listed company intend to sell their 30% stake to the industrial conglomerate Akij Resources. This decision was made during a board meeting on April 25. An agreement has already been reached between the two parties, pending regulatory approval. Akij Resources will acquire 30,780,000 shares, representing 30% of Dominace Steel's total shares, from the current promoters and directors. The transaction, valued at approximately Tk 40 crore, involves a share price of Tk 13 each, comprising Tk 10 face value and Tk 3 premium. The remaining 70% of the shares are held by institutional and individual investors in the stock market. Akij Resources plans to resume full production and expand the business after taking over the management responsibilities, subject to BSEC approval. Despite the acquisition, Dominace Steel reported a loss of Tk 72 lakh in the January-March quarter. One of its two factories, located in Narsingdi, remains closed, while the Savar factory is operational. The company, listed in 2020 and currently in 'B' category, had a market value of around Tk 80 per share as of yesterday, a significant increase from Tk 28.40 at the beginning of the year, raising concerns about abnormal price hikes possibly linked to insider information about the ownership change.
The acquisition of a significant stake in a loss-making entity by a larger conglomerate highlights strategic investment dynamics, potentially driven by undervalued assets or future market potential. The substantial increase in Dominace Steel's share price preceding the official announcement suggests market anticipation, raising questions about information symmetry and regulatory oversight in preventing price manipulation. Akij Resources' stated intention to revive production and expand operations indicates a belief in the company's turnaround potential, contingent on successful integration and operational efficiencies. This transaction underscores the ongoing consolidation within the steel sector and the challenges associated with managing publicly listed, underperforming companies, while also pointing to the importance of robust disclosure mechanisms to ensure fair market practices.
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