CCP approves Nishat Group acquisition of Rafhan Maize in landmark deal
The deal is one of the largest mergers in Pakistan in nearly two decades
Business Desk
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Rafhan Maize is the market leader in Pakistan’s starch industry
The Competition Commission of Pakistan approved the Nishat Group's acquisition of shareholding in Rafhan Maize Products Company Limited on Monday.
The deal, in which the Nishat group will purchase shares from US-based Ingredion Incorporated and other individual shareholders, will be one of the largest mergers in Pakistan in nearly two decades.
Who is acquiring Rafhan Maize?
The acquiring entities include Nishat Hotels and Properties Limited, D.G. Khan Cement Company Limited, Nishat Mills Limited, Lalpir Power Limited, Pakgen Power Limited, Nishat Power Limited, and Nishat Chunian Power Limited.
In February, the parties entered into share-purchase agreements for the sale of up to 75.1% of the shareholding in Rafhan Maize Products.
Why did the CCP say about the acquisition?
The transaction was authorized under the Competition Act, 2010.
The CCP found that the transaction does not create or strengthen a dominant position in the relevant market.
While it identified a vertical overlap between Rafhan's upstream maize derivative products and Nishat Mills' downstream textile operations, it concluded the deal is unlikely to substantially lessen competition.
The presence of alternative domestic suppliers and import availability would constrain any potential anti-competitive conduct.
The commission also found that starch constitutes a relatively small proportion of input costs in downstream textile production, limiting foreclosure risks.
Rafhan was assessed to lack both the ability and incentive to engage in input foreclosure, given spare production capacity in the upstream market and competitive pressure from other suppliers.
The acquiring entity was also found to lack sufficient market power to distort downstream competition.
What does Rafhan Maize Products do?
Rafhan Maize is the market leader in Pakistan’s starch industry, operating three production facilities nationwide.
It operates in the upstream market for maize derivative products, including starch, liquid glucose, dextrose, dextrin, and gluten meals. These products are used as inputs across several industries, including food processing and textile manufacturing.
The company has a market capitalization of roughly PKR 100 billion.
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