Asif Showkat, NewAge, September
The industries ministry has again asked Unilever and Aventis to offload their 10 per cent shares, including five per cent stakes of the government in each of the two global consumer goods and pharmaceutical giants.
The government made the fresh offer after the two multinational companies sought to acquire the government stakes, industries ministry officials said.
The ministry had sought legal opinion from the stock market watchdog, Securities and Exchange Commission, about selling the government’s five per cent shares out to the public.
‘We’ve asked the SEC to initiate legal procedure to allow offloading of the shares in the two multinationals,’ said a high official of the ministry, who attended a meeting Tuesday on how to offload their shares.
Rules allow the majority shareholder of a company to buy the stakes of the smaller shareholder if the latter agrees to sell its shares.
However, in this case, the government wants to sell its five per cent shares to the public and asks both Unilever and Aventis to offload another five per cent shares through the country’s two stock markets.
The issues were discussed Tuesday at an industries ministry meeting, presided over by Mahbub Jamil, special assistant to the chief adviser, and attended by senior officials of Unilever, Aventis and SEC.
Officials of the two multinational companies offered to buy the government stakes while the industries ministry proposed that the government’s five per cent shares should be sold in the country’s capital market.
The Unilever Bangladesh board earlier rejected a similar proposal of the industries ministry to offload five per cent of its 39.5 per cent stakes in the company. The government holds about 40 per cent stake in the Bangladesh operations of French drug maker Aventis, now known as Sanofi-Aventis.
The government had decided to offload at least five per cent of its stakes in the multinational companies such as Unilever and Aventis by April 2006 as part of its wide-ranging plan to strengthen the country’s capital market.
But no visible progress could be made in more than two years since then due to indifference of the multinational companies, industries ministry officials said. ‘Unilever shares are already being traded in Pakistan and other regional capital markets. But here the company is opposed to the government’s proposal to offload a small amount of its shares,’ said economist Professor Abu Ahmed.
Multinational companies can enjoy tax exemption if they offload shares in the stock markets, he pointed out. The capital market expert expressed his strong reservation about the company’s proposal to buy the government’s stakes instead of offloading their shares in the stock markets. Formerly known as Lever Brothers Limited, the Anglo-Dutch fast-moving consumer goods company has been operating in the country since 1964, with the government holding minority shares. Renamed as Unilever globally, the company is the market leader in Bangladesh with its popular beauty soap brand Lux and about 40 other toiletries and consumer brands.
Unilever Bangladesh has been witnessing double-digit growth since 1990s with annual gross turnover estimated at $200 million, maintaining its stronghold in the country’s fast-growing consumer market. Experts said Unilever stocks would be the most sought-after ones in the capital market if it decides to go public.
An inter-ministerial meeting held last week at the finance ministry reviewed the progress of the government’s plan to bring quality shares, including those of multinationals and public sector companies, to the country’s stock markets.
The meeting was told that multinational companies had ignored repeated appeals of the industries ministry for taking steps towards share offloading, while listing of state-owned enterprises also faced hurdles from bureaucracy and litigations.
The government’s year-old plan to bring major state-owned companies, including the good performing ones, to the capital market also did not see much progress. The finance ministry meeting that reviewed the status of the government’s plan found that only three out of nearly 40 state-owned enterprises had so far offloaded their shares. They are Jamuna Oil Company Limited, Meghna Petroleum Limited and Titas Gas.
The decision of offloading of the shares of other companies did not progress due to procedural delays. Legal restriction held back the offloading of the government’s 25 per cent out of 51 per cent stake in Usmania Glass Sheet manufacturing company.
The government has also planned to offload more of its shares in Atlas, National Tubes and Eastern Cable, which are already listed with the stock market. Earlier, finance adviser Mirza Azizul Islam had instructed officials to complete asset valuation of some of the fully government-owned companies by June to pave the way for their listing with the stock market.
A committee was formed comprising officials of SEC, Investment Corporation of Bangladesh and industries ministry to find out by June 2008 whether shares of any of the state-owned sugar mills can be offloaded.