Beximco merges BOL with parent firm to add muscle

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Kayes M Sohel
Leading conglomerate Beximco Group said Thursday it would merge its internet service provider with its parent firm Bangladesh Export Import Company Ltd (Beximco) to strengthen its capital base and increase operational efficiency.
Bangladesh Online Limited (BOL) is the country's one of the top ISPs but it was facing increasing competition from newcomers and leading charity Brac which operates the country's largest internet provider.
"The board of directors of the two subsidiary companies, in a separate meetings, have approved draft scheme of the amalgamation of BOL with Beximco," the companies said in an identical notice to the stock exchanges.
They recommended exchange of 2.82 ordinary shares of BOL for one ordinary share of Beximco, subject to clearance of the High Court. Both the companies are listed with the country's two bourses.
The board of directors also okayed a move to seek HC's approval for the merger clearance.
Last year Beximco made Tk 909.95 million net profit after tax including capital gain on sale of shares. Its earning per share (EPS) was Tk 16.58.
BOL posted profit after tax of Tk. 47.12 million with EPS of Tk 1.68 in 2008.
Market reacted positively to the announcement, as traders snapped up Beximco shares making it the day's turnover leader with transaction worth Tk 624.04 million.
Beximco scrip gained 4.02 percent to Tk 292.10 at close, while BOL dropped 11.67 percent to Tk 108.90. The merger was announced before the start of trading hours.
A market expert said the merger might not bring good news for the investors.
"Merger means dilution in share values. It does not always lead to efficiency of the company. So, investors should be cautious and do some home work on the company's financial strength," he added.
Beximco Group, engaged in diverse business areas, has six publicly listed companies and sixteen private companies, making it one of the largest conglomerates in the country.
The Group's turnover in 2007 was Tk 16.5 billion. It employs 35,000 people and has 170,000 shareholders. Beximco's shares make up 5.49 per cent of the Dhaka Stock Exchange (DSE).
Its industrial units include jute, textiles, basic chemicals and pharmaceuticals and marine foods and non-industrial undertakings are focused on real estate and construction, engineering, media, information technology, trading and financial services.