Nestle Pakistan’s parent company bought 1.15 million shares in the company for Rs. 6.94 billion, according to a regulatory filing.
Société des Produits Nestlé S.A., which already owns 59 percent of total shares in its subsidiary, bought the additional shares at a rate of Rs. 6000.
The regulatory notification added that the holding period for the transaction is over six months and that the profit should be deposited with the Securities and Exchange Commission of Pakistan (SECP) if the buyer sells the newly bought shares within six months.
“Sponsors buy shares when they feel that there’s value in the company,” CEO Topline Securities, Mohammed Sohail, told a national daily, adding that the purchase showcased the parent company’s confidence in Nestle Pakistan’s performance.
He said that this was a sign of a future boost in cash flows and noted that many other holding companies around the world have been buying back shares from subsidiaries.
Nestle Pakistan reported a net profit of Rs. 5.78 billion in the first six months of 2021, up 49.2 percent from a year ago. Similarly, its sales rose by 12.7 percent year-over-year to Rs. 65.81 billion in the first six months of 2021.
In its earnings report, the company asserted that it “remains cautiously optimistic” about performance in the second half of 2021, despite pandemic-linked disruptions, supported by “strong brand equity, new product launches” and operational reforms.