Nestle Lanka goes private; ends 40-year listed status

By Hiran H. Senewiratne

Nestle Lanka announced a decision to go private, ending its 40- year status as a listed company in the CSE. The move was made by the Nestle Lanka Board and is subject to shareholder and regulatory approvals, share market sources said.

Currently majority of its shares amounting to 91.95 per cent is owned by its parent company, Nestle S.A. The latter will purchase the remaining 8.05 per cent shares from those wishing to divest at Rs. 1,500 per share.

The public shareholding of 1983-listed Nestle Lanka is 8.05 per cent, held by 6,054 shareholders. As at December 31, 2022, net asset value per share was Rs. 199.95 (up from Rs. 157 in 2021).

The delisting was announced after the market closed with the share price unchanged at Rs. 1,120.25. In FY22, the highest price was Rs. 964.75 (down from Rs. 1,330 in FY21), lowest was Rs. 870 (versus Rs. 1,200 in FY21) and closed 2022 at Rs. 905, down from Rs. 1,215.50 in 2021.Earlier, announcing the company’s decision to delist from the CSE, a Nestle Lanka press release said, among other things:

‘The company has been actively seeking ways to have a more efficient operation to enhance its contribution to the country even further. Therefore, our Board of Directors has authorized the proposal to delist Nestlé Lanka from the Colombo Stock Exchange, subject to necessary approvals and clearances. The delisting will also help the company strengthen its focus on core business activities, whilst upholding Sri Lanka’s statutory reporting and compliance requirements.

“We would like to thank our valued shareholders for continuing to place their trust in us and for the constant support offered over the years. We strongly believe that this proposal is in the best interest of our shareholders and assure that they would be rewarded with an attractive and fair premium. As in the past, we will work with communities and bring high quality products to our valued Sri Lankan consumers, whilst doing good for the planet. We will continue to drive efficiencies whilst focusing on delivering on our promise to the country and its people” said Bernhard Stefan, Managing Director of Nestlé Lanka.

‘Driven by its purpose of ‘unlocking the power of food to enhance quality of life for everyone, today and for generations to come’, Nestlé has nourished generations of Sri Lankan families with high quality food and beverage products from early childhood to old age. Having started its operations in Sri Lanka in 1906, today, Nestlé has become an integral part of Sri Lankan lives. The company manufactures over 90% of its products sold in Sri Lanka locally at their state-of-the-art factory in Kurunegala, employing strict safety and quality controls.’

Amid those developments CSE trading activities were positive yesterday and the turnover recorded was the lowest after 52 weeks. Trading ended at 12 noon. Both indices moved upwards. The All- Share Price Index went up by 30.4 points and S and P SL20 rose by 26.7 points. Turnover stood at Rs 127 million without any crossings.

In the retail market top seven companies that mainly contributed to the turnover were, Melstacorp Rs 30.1 million (556,000 shares traded), Lanka IOC Rs 21.9 million (138,000 shares traded), Expolanka Holdings Rs 20.9 million (134,000 shares traded), Seylan Bank Rs 15.5 million (551,000 shares traded), Browns Investments Rs 13.5 million (2.5 million shares traded), Aitken Spence Hotels Rs12.1 million (206,000 shares traded) and Sampath Bank Rs 11.9 million (253,000 shares traded). During the day 12.7 million share volumes changed hands in 4500 transactions.

It is said high net worth and institutional investor participation was noted in JKH and Royal Ceramics. Mixed interest was observed in Lanka IOC, Expolanka Holdings and Dialog Axiata, while retail interest was noted in Browns Investments, SMB Leasing and LOLC Finance.

The Capital Goods sector was the top contributor to the market turnover (due to JKH and Royal Ceramics), while the sector index gained 0.75 per cent. The share price of John Keells Holdings increased by 25 cents to Rs. 135.75. The share price of Royal Ceramics appreciated by 20 cents to Rs. 27.

The Food, Beverage & Tobacco sector was the second highest contributor to the market turnover (due to Browns Investments), while the sector index increased by 0.79 per cent. The share price of Browns Investments recorded a gain of 10 cents to settle at Rs. 5.40.Yesterday the Central Bank’s US dollar buying rate was Rs 312.50 and the selling rate Rs 326.62.